Gold recorded its biggest fall in a day in over a month after an unexpectedly large increase in weekly U.S. jobless claims bruised investor risk appetite, bashing commodities . Dollar pairs with commodity-linked currencies showed a stronger USD, such as against the Aussie and Canadian Loonie. The greenback was also boosted against the Euro and Sterling.
The USD gained over 90 pips against the CAD, rising to 0.9823 after the jobs report from 0.9734 pre-news. AUDUSD dipped from 1.0515 to 1.0454.
U.S. data that showed initial claims for unemployment benefits rose much more than forecasted last week which provided more evidence of the sluggishness in the economy and underscores the the Fed’s commitment to keeping interest rates low.
Gold would normally benefit from such uncertainty over the economic outlook but this aversion to risk stripped 5 percent off the crude oil price, hit hard on precious metals like gold and silver and weighed on higher-yielding currencies like the Australian Dollar.
Credit Agricole analyst Robin Bhar said, “I liken it to the ugly contest — which is the least ugly. The least ugly is gold if you treat it as a currency, and the ugliest is possibly the euro or maybe sterling. So the dollar is fairly pretty by comparison.”
He added that “Clearly the Fed isn’t going to shrink its balance sheet in a hurry. At the same time, they won’t do more QE for the moment, so that’s helping the dollar.”
The gold price has surrendered all its gains this week dropping to $1,514.13 from its week high hit yesterday at $1,557.88, almost a $44 drop.