Gold has a modest recovery, closing at $1800 in New York

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Gold regained a price above a key phycological level when it closed at $1800, up +0.4% in New York. As of 5:10 PM EDT gold futures basis, the most active December 2021 Comex contract was trading up $2.80 (+0.16%) and fixed at $1796.30. The precious metal traded to a high today of $1803.40 and a low of $1785.10. This is the first instance in the last three trading days in which gold has closed higher when compared to the previous day and traded to a higher low but a lower high. Silver futures basis the most active December contract traded fractionally higher, gaining approximately $0.03 (+0.12%) and is currently fixed at $24.085.

The modest recovery in gold and silver was largely a result of dollar weakness. The U.S. dollar index is currently fixed at 92.49 after factoring in today’s decline of -0.17%, or 16 points. However, gold prices declined fractionally for those using other currencies, specifically the Euro, which had fractional gains after the European Central Bank announced that it would slow down its current pace of asset accumulation (Euro bonds).

According to Reuters, “Gold firmed on Thursday, lifted by a slight retreat in the dollar, but renewed bets that the U.S. Federal Reserve may start early tapering of economic support capped gains, with the European Central Bank also slowing its bond-buying.”

Last Friday’s jobs report for the month of August came in exceedingly below expectations (economists predicted that over 700,000 jobs would be added to August payrolls), CNN reported that only 235,000 jobs were added back to the economy last month. However, the U.S. weekly jobless claims came in near an 18-month low. This could persuade the Federal Reserve to announce tapering their asset purchases before the end of the year.

Ed Moya, a senior market analyst at foreign exchange brokerage Oanda, told Reuters that, “U.S. weekly jobless claims data came in at near 18-month lows, which cements the belief that a December (Fed) taper announcement was possible. ... So, gold prices are going to consolidate around these levels.” He added, “The increased likelihood that the ECB may start reducing stimulus at some point next year drove gold’s initial decline back below $1,800 per ounce.”

When the Federal Reserve meets on September 21 for the next FOMC (Federal Open Market Committee) meeting, they most certainly will take into account the weak jobs report from August and the current state of the Delta variant as it pertains to slowing down the economic recovery in the United States.

According to CNN, “Covid-19 cases have been on the rise in much of the U.S., and the rise in hospitalizations continues in hotspots throughout the country. Children now represent more than a quarter — or 26.8% — of weekly Covid-19 cases nationwide.” Today it was reported that in the United States, there were 104,887 new confirmed cases, taking the daily average to 151,816. This recent surge in new cases prompted President Biden to address the nation, outlining a six-step plan to get the pandemic under control.

Because the pandemic is still impacting our economic recovery, it will be a major subject discussed during the next FOMC meeting.

Wishing you, as always, good trading and good health,

Gary S. Wagner - Executive Producer