By David Brough
Gold’s latest slide, hastened by stronger-than-expected U.S. jobs data, may presage a renewed climb in prices of the yellow metal as the global economic downturn tightens its grip.
Gold prices fell 1.79 percent to $1,682.59 per ounce late on June 5 after U.S. non-farm payrolls data came out less badly than feared, encouraging hopes for a swifter economic bounce than had been expected.
Gold has dropped below a recent sustained psychological support level of $1,700 per ounce.
However, current price levels could represent a bargain opportunity for those who foresee a dire set of second-quarter earnings results, heightening risks of an equities selloff, as investors take stock of the gravity of the unfolding economic crisis, with U.S. unemployment levels still extremely high due to the impact of Covid-19.
Such sentiment could underpin a flight to the safety of gold.
“We think the momentum generated by the enormous flood of money going into the precious metals exchange-traded funds (ETFs) is indicative of things to come for the sector,” wrote Lawrie Williams, commentator for bullion dealer Sharps Pixley.
“We suspect that the $1,750 current ceiling for gold will be breached comprehensively by the northern hemisphere fall.”
Disclaimer: Any opinions expressed in this article are solely those of the author and should not be seen as investment advice.