By Geoffrey Smith
Investing.com – Gold prices reversed expected gains on Friday, despite a miserable report in the US labor market that has heightened expectations of lower interest rates for longer.
On Thursday, Fed funds futures began for the first time implying a US policy target rate below zero, which would strengthen the bullish case of gold by wiping out nominal government debt yields short-term American, the most liquid paradise asset in the world.
Friday, five-year Treasury yields remained at or near record levels, little affected by news or rumor that 20.5 million Americans lost their jobs last month happy conversations after a phone call between US and Chinese trade negotiators (President Donald Trump later told Fox that he still had “problems” with the Chinese trade issue).
“Social distancing, consumer anxiety, travel restrictions and the legacy of up to 40 million job losses mean there is no prospect of a V-shaped recovery,” said the officials. ING analysts in a note to clients.
At 11:00 am ET (1500 GMT), deliveries on the Comex exchange were down 0.2% to $ 1,722.20 an ounce, while they were down 0.1% to 1,715.79 $.
up 2.0% to $ 15.90 an ounce, a new high in two months, while up 1.7% to $ 795.50.
However, the most remarkable engine was up 1.2% to more than $ 2.41 a pound, its highest level in almost two months. Copper prices have always been a strong proxy for global industrial activity, suggesting that its 10% rebound from March lows could at least herald a lows for the world economy.
Ulrich Stephan, strategist at German Bank (DE :), argued in a morning note that silver also has the potential for outperformance in the short term, since more than 60% of final demand for the metal is industrial, and given that the ratio Gold and silver prices, at around 109, are still well above its historic range of 60 to 80 to 1.
In Europe, meanwhile, the war of words between Germany and the EU over the European Central Bank’s bond buying policy continued. The Court of Justice of the European Union said in a statement that only it could decide whether an EU institution had acted beyond its competence.
This is a reprimand to the highest German court, which had claimed this right earlier in the week, in an episode that threatened to curtail Europe’s political response to the pandemic. Eurozone sovereign spreads tightened the most in a week in response.
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