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James Hyerczyk
Gold

Gold futures are trading lower on Thursday as investors looking for safety, bid up the U.S. Dollar, driving down demand for the dollar-denominated asset. Traders are saying that the greenback regained last week’s upside momentum as optimism over a coronavirus vaccine eroded.

Fear that the surge in coronavirus cases in the United States would lead to more economic restrictions and threaten the recovery, also weighed on demand for gold. The biggest bearish influence on the metal, in my opinion, is the lack of progress toward a new fiscal stimulus package.

At 14:16 GMT, December gold futures are trading $1856.50, down $17.40 or -0.93%.

The Dollar’s Safe-Haven Appeal

The dollar is up on Thursday against it rivals, benefiting from uncertainties over a spike in new coronavirus cases in the United States and resultant restrictions.

Rising coronavirus cases in the United States, Japan and Russia too helped offset the optimism from promising vaccine announcements from Pfizer and Moderna.

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Central Banks to the Rescue

With government’s stubbornly limiting new fiscal stimulus measures, the global economy risks economic damage due to the impact of the rising virus cases. This means the major central banks are going to have to do the “heavy-lifting” over the short-run.

Jobless Claims Rise as US Labor Market Continues to Struggle

The pace of workers filing for unemployment claims picked up last week and was a bit higher than Wall Street had been expecting. Jobless claims totaled 742,000 for the week, the Labor Department reported Thursday, ahead of the 710,000 estimate from economists surveyed by Dow Jones.

That total also represented an acceleration from the previous week’s total of 709,000 and a continuation of the job market struggles since the coronavirus pandemic hit in early March.

The week-over-week increase was the first after four straight weeks of decline. Even with the increase for the most recent period, the four-week moving average, which smooths volatility in the numbers, decreased 13,750 to 742,000.

Continuing claims, which trail by a week, took another substantial drop, falling 429,000 to 6.37 million, a fresh pandemic-era low.

Daily Forecast

Expectations that the Federal Reserve will increase stimulus continue to grow, but that is a long-term bullish indicator. What short-term gold traders want is fiscal stimulus.

On Wednesday, U.S. President elect Joe Biden expressed hope that Republicans in Congress would be more inclined to move forward on COVID-19 relief legislation after President Donald Trump leaves office in January.

That may be as good as it gets for short-term gold traders at this time because fiscal stimulus is going to remain a bearish issue because Trump hasn’t yet conceded the election. Meanwhile, fiscal stimulus remains far away until that matter is settled.

For a look at all of today’s economic events, check out our economic calendar.

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