Gold has extended its decline from a record, trimming the longest stretch of weekly gains since 2006, as a stronger dollar curbed the metal’s haven appeal. Silver fell after earlier closing in on $30 an ounce.
The dollar headed for its first gain in four sessions amid a deepening rift between Washington and Beijing. President Donald Trump signed a pair of executive orders prohibiting US residents from doing business with the Chinese-owned TikTok and WeChat apps beginning 45 days from now.
Meanwhile, a high-powered US panel recommended tightening the disclosure requirements for Chinese companies listed on American exchanges.
Bullion is still up more than 35% this year, putting it on track for the biggest annual gain in over four decades, as the health crisis, negative real rates, a broadly weaker dollar and geopolitical risks spark a flight to precious metals. Further gains are predicted - Bank of America Corporation reiterated its forecast that gold may reach $3 000 an ounce in 18 months and said it’s “feasible” that silver could hit $35 in 2021.
"Gold and silver face stern tests of their character," said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda Corporation, citing US payroll data due later Friday and the boost to the dollar from Trump’s executive orders.
Spot gold declined 0.2% to $2,059.20 an ounce at 11:57 a.m. after earlier hitting a record $2 075.47. Prices are up for a ninth week. Holdings in exchange-traded funds backed by the metal are at an all-time high.
Spot silver dropped 2.1% to $28.3115 after earlier advancing as much as 3.2% to $29.8591, the highest since 2013.
Investors will now focus on the monthly employment report from the US, which is expected to show a slowdown in job gains last month after a surge in coronavirus cases across the country. Global infections passed 19 million.
"There is so much noise in the US economic numbers at present, with most of them flattering to deceive, that at present the markets should be looking to the longer term," said Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc. However, if the employment report is "strong then it might extend any correction in gold and silver."
Elsewhere, negotiations on a virus relief package ended with the White House and Democrats making no headway on resolving their biggest difference, bringing the talks to the brink of collapse. With no deal immediately in the offing, Trump said Thursday he is ready to sign orders extending enhanced unemployment benefits for the jobless and imposing a payroll tax holiday for employers and workers.
Signs that Europe’s biggest economy is finding its feet again may also be putting pressure on bullion. Germany’s industrial output grew slightly more than forecast in June, following figures released on Thursday that showed factory demand was at 90.7% of the level recorded at the end of last year. European Central Bank Chief Economist Philip Lane has cautioned against any premature optimism though, arguing that the region’s third-quarter performance will be key to determining the strength and sustainability of the recovery.