Gold futures are trading steady-to-lower at the U.S. mid-session on Thursday as investors continue to assess the impact of mounting coronavirus cases and worsening U.S.-China relations against the backdrop of firm demand for higher-risk assets amid growing optimism of a swift economic recovery from the crisis.
At 15:16 GMT, August Comex gold is trading $1806.50, down $7.30 or -0.40%.
Falling Treasury yields, lower stocks and a weaker U.S. Dollar could be enough to send gold prices higher later in the session, but right now, we’ll have to be happy with these three factors limiting losses.
Our key indicator is Treasury yields. When they fall, gold tends to weaken. Although this may not be the case at the U.S. mid-session, it’s too reliable an influence to ignore. Obviously, gold bulls would like to see the government and the Fed announce more stimulus measures, but that’s not likely to happen today. However, falling rates are indicative that something may be coming in those areas – at least investors appear to be indicating the need for additional help.
Wall Street Falls as Virus Fears Eclipse Upbeat Retail Report
U.S. stocks are down on Thursday with the S&P 500 retreating from a five-week high as concerns about the economic toll from another round of shutdowns across the United States offset data showing upbeat domestic retail sales in June.
Declining issues are outnumbering advancers 3.09-to-1 on the NYSE and 3.3-to-1 on the NASDAQ.
US Economic Data Mixed
The Commerce Department’s report showed retail sales jumped 7.5% last month compared with economists’ forecast of 5%, signaling the economy was continuing to limp out of a coronavirus-driven slump.
Another report from the Labor Department on Thursday showed weekly jobless claims fell to 1.30 million in the week-ended July 11, down slightly from the previous week but remain roughly double their highest point during the global financial crisis.
One emerging concern is in the labor market. Millions are set to lose their unemployment checks on July 31 when the government stops paying an additional $600 per week to jobless self-employed people, gig workers and contractors who do not qualify for regular state unemployment benefits.
Treasury Yields Edge Lower
U.S. government debt prices were slightly higher Thursday as concerns over rising coronavirus cases stateside and U.S.-China tensions tempered optimism arising from progress toward a vaccine. Yields were also pressured by the mixed economic news which may be a sign that investors are looking for additional stimulus from the government or Fed.
Dollar Putting in Mixed Performance
The U.S. Dollar strengthened early Thursday before turning negative for the session. The price action in gold appear to be mirroring the movement of the dollar.
The catalyst behind the earlier strength was poor Chinese retail sales as investors chose to focus on consumer spending rather than better-than-expected overall growth in the economy.
We’re seeing a mixed performance in the gold market today, but when the dust finally clears, we could find gold under pressure due to a stronger U.S. Dollar, which is getting a safe-haven bid from escalating U.S.-China relations.
However, losses could be limited by weaker equities and Treasury yields.