Gold Pares Weekly Gain After Rally to Record, Silver Retreats

(Bloomberg) — Gold retreated 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 U.S. residents from doing business with the Chinese-owned TikTok and WeChat apps beginning 45 days from now. Meanwhile, a high-powered U.S. 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 Corp. 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 Corp., citing payroll data due later Friday and the boost to the dollar from Trump’s executive orders.

Spot gold declined 0.2% to $2,059.65 an ounce at 12:52 p.m. in Singapore 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 1.9% to $28.3797 after earlier advancing as much as 3.2% to $29.8591, the highest since 2013.

Jobs Report

Investors will now focus on the monthly employment report from the U.S., 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.

“If tonight’s U.S. labor market report produces another disappointing figure, it may very well propel gold past the $2,100 level,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “How high gold may eventually run to is anyone’s guess now, but longer-term I think we are witnessing a new structural regime for gold, where prices are unlikely to return to the low $1,000’s even after the coronavirus abates.”

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.

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