The prices of gold recovered on Monday on weak U.S. jobs growth data that strengthened hopes for an immediate economic response from the government. The yellow metal’s gains were capped by optimism over the COVID-19 vaccination. Britain is already preparing to roll out the Pfizer/BioNTech vaccine this week.
Spot gold is currently trading at $1,827.60 per ounce as of 0856 GMT.
Data from the U.S. Labor Department showed that the nonfarm payroll growth in November failed to meet analysts’ expectations of 469,000 and increased by only 235,500 jobs, down from 610,000 jobs in October. It is the fifth consecutive month of job slowdown and the smallest gain in six months. The weak employment growth underscored the challenges that President-elect Joe Biden will face when he assumes office on January 20. He called the report grim and called on President Donald Trump and Congress to provide fiscal stimulus. Bipartisan U.S. lawmakers are finalizing a $908 billion stimulus bill.
According to Axi’s chief global market strategist Stephen Innes, soft jobs growth and COVID-19 restrictions that tighten social mobility are likely to prompt an immediate policy response from the U.S. Congress. He also said that the bipartisan nature of the stimulus package suggests more compromise and negotiations before it can be finalized.
In world politics, the U.S. is set to impose sanctions on up to 14 Chinese officials for their alleged role in the disqualification of elected opposition lawmakers in Hong Kong. The measures could include financial sanctions and asset freezes. In Europe, Britain and the European Union will make their final attempt to come up with a post-Brexit trade deal.
On the technical aspect of trading, OANDA’s senior market analyst Jeffrey Halley said gold is facing a resistance price at $1,850 per ounce and a move away from this level could set the bullion to test a resistance level at $1,920.
In a related development, the U.S. Commodity Futures Trading Commission reported that market speculators raised their bullish stance in COMEX gold contracts for the week that ended on December 1. Also, the holdings in the largest gold-backed exchange-traded fund in the world, SPDR Gold Trust, dropped by 0.6% last Friday to 1,182.70 tons.