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Gold Stocks & Bullion Jump On Latest Jobless Claims

The price of gold rebounded on May 7. This came as new data showed another week of rising unemployment figures in the U.S. Of course, this sparked more fears over a global economic slowdown. Comments also centered around historic levels being a potential trigger to more economic stimulus. But seeing as many still have yet to receive their helicopter money, how can another stimulus round begin? That’s a question for another day.

Spot gold rallied back above $1,700 to highs of $1,733. Gold futures helped spark a continued rally in countless gold stocks to watch this week. Even amid strong earnings, the compounded sector momentum saw gold stock reaching or nearing new 52-week levels. “You had high unemployment (numbers) that came out … That’s still telling people to maybe look for the safety trade,” said Michael Matousek, head trader at US Global Investors.

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More data also suggests reasons to fly into safer havens. Worker productivity dropped at its quickets pace in more than 4 years in Q1 2020. Again, another reason why people think another stimulus could be coming. No matter the case for or against more helicopter money being sent out, gold is seeing a new shine this week. Even though the U.S. dollar’s rise (another safe haven) put a cap on gold’s gain, the sentiment is evident right now.

Are Gold Prices Read For New Highs?

Data from the World Gold Council showed that global holdings in gold-backed ETFs rose in April. This came even as stocks saw their own rally; the best month in decades. Net inflows were up over 5% for the month. This added 170 tons and boosted total holdings to a new all-time high of 3,355 tons.

“Continued record growth for gold-backed ETFs, despite some rebound in other asset classes, highlights that investors are embracing gold’s role as a store of value and source of liquidity and returns.”

Juan Carlos Artigas, Head of Research at WGC.

Gold prices rebounding on Thursday could be the first step in gold’s next leg if this trend upholds overnight. While it’s unusual to see stocks and gold move in unison, it isn’t an anomaly at all. Gold’s all-time high still sits above $1,900/ounce. This year we saw the precious metal already reach highs of $1,788.80. On May 7, the price of gold came within $55 of that 7 year high. If gold can steady firmly above $1,700 as a new base instead of floating between $1,685-$1,698 when it contracts, that may be a good sign for gold bulls.

Over the last few weeks, gold has jumped between its recent high of $1,788.80 and lows of $1,666.20. However, for the most part, gold prices have maintained trading levels above its 50 day moving average since the end of March. Prior to that, we saw gold’s 200 day moving average act as the ultimate support level. Currently, the 50DMA sits around $1,657 and the 200DMA is around $1,551.

Bank of America recently grabbed headlines in financial news after analysts said that they see gold prices pushing to $3,000 an ounce within 18 months. Do you think this will be attainable? Leave a comment and let us know.

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