Gold futures finished lower for September 30’s session resulting in a loss for the month. Prices responded to a stronger US dollar that has been weighing significantly on commodity prices. Nonetheless, the bullion recorded an eight quarterly gain underpinned by haven demand for gold. The editor of Gold Newsletter, Brien Lundin, said:
“The stats show that it was a great quarter for the metals, but September was a lousy month. A small uptick in real interest rates was the primary reason for the month’s loss for gold. Considering the blistering move gold had made earlier in the quarter to over $2,000 an ounce, and the fact that it had failed to build upon that rally, the minor rise in real rates was all that was needed to shake the weak hands out of the gold market and start a sell-off.”
On September 30, December gold lost $7.70, or 0.4%, to settle at $1,895.50 an ounce. On the other hand, December silver lost around 95 cents which translates to 3.9% to end the month at $23.494 an ounce.
For September, gold lost around 4.2% but gained 5.2% over the three-month period that ended in September as reported by Dow Jones Market Data. In the meantime, silver lost almost 18% in September but exploded by 26% for the quarter. Recently the value of gold has waned and waxed in integration with the dollar.
The Resurging Dollar
A significant resurgence in the US dollar is considered by commodity investors as making the purchase of gold less compelling for overseas buyers. Hence, it is undercutting demand. The dollar was up by 1.8% month to date according to the ICE U.S. Dollar Index DXY.
The move for the greenback comes after a controversial presidential debate between former Vice President Joe Biden and President Donald Trump. The race for the White House is heating up in the United States as the November 3 elections approach. The head of market analysis, EMEA and Asia regions at StoneX, Rhona O’Connell, said:
“For gold, it was a “‘buy the rumour sell the fact’ over the Presidential debate and the market is more interested in the development of the stimulus talks.”
Analysts at Zaner Metals said in a daily note:
“the gold and silver markets badly ‘need’ a stimulus package to ‘save’ them from a resumption of the type of selling seen at the beginning of the month. On the other hand, the odds of getting a stimulus package have improved with a barrage of layoffs expected in the coming 24 hours as that is likely to move Congress, including an announcement by Disney DIS, -1.05% of 28,000 jobs cuts at its parks.”
All that information is compounded by the possibility of another wave of layoffs at many US airlines.
Gold futures had earlier surged briefly to trade back above $1,900 immediately after data revealed the pace of the United States private sector job growth in September was the strongest in the last three months. The private-sector employment increased by 749,000 jobs as reported by Automatic Data Processing Inc. The government is set to release its September jobs report on October 2.
In the meantime, the record plunge in the US economy in Q2 2020 was revised slightly lower to a 31.4% annual pace coming from a previous reading of 31.7%. December copper settled at $3.0325 a pound, up 1.4% for the session. Based on the most-active contracts, prices logged a monthly loss of almost 1%.
The January platinum contract increased by 1.3% to reach $909.20 an ounce, trading about 5% lower for September. December palladium fell slightly by 0.05% to trade at $2,330.50 an ounce but up almost 2.3% for the month.