Jakarta, CNBC Indonesia – World gold prices took a sharp dive on Tuesday (11/8/2020) due to profit taking (profit taking) massive response to signs of a revival in the United States (US) economy. Profit taking the craze even more after Russia announced it had discovered a coronavirus vaccine.
Launching Refinitiv data, at 20:11 WIB the price of gold today dropped 4.3% to US $ 1,939.37 / troy ounce on the market spot. This level is the lowest since July 30. When viewed from the all-time high of US $ 2,072.49 / troy ounce this precious metal fell 6.42%.
The record high was reached on Friday last week, but on that day the decline in gold began. The reason is the slick US labor data.
The US Department of Labor today reported the unemployment rate in July fell sharply to 10.2% from 11.1% previously. In addition, over the past month, the US economy has again absorbed labor outside the agricultural sector, which is known by the term non-farm payrolls, as many as 1.763 million people, more than the prediction on Forex Factory of 1.53 million.
These data show the US economy started to rise after nyungsep until experiencing a recession in the second quarter of 2020.
Not only that, the average hourly wages also increased 0.2% in July after declining for 2 consecutive months. The return to rising average wages is likely to increase consumer spending or household spending which is the backbone of the US economy. Household spending contributes around 70% to US gross domestic product (GDP).
In addition, the President of the United States (US) Donald Trump signed four executive orders on Saturday (8/8/2020) local time or Sunday (9/8/2020) WIB. One of the four executive orders contains direct assistance to the unemployed of US $ 400 per week.
The US $ 400 per week aid will certainly increase the purchasing power of US citizens, which again has the potential to have a significant impact on GDP.
The improvement in the labor market and Trump’s direct assistance policy made hopes that the US economy would immediately revive, the attraction of gold as a safe asset (safe haven) becomes smudged thereby triggering the action profit taking.
Profit-taking became increasingly frenetic after local Russian media reported that Russian President Vladimir Putin announced that his government had approved the world’s first coronavirus vaccine.
The announcement made European stock exchanges and the United States sharply strengthen, and the price of gold continued to decline.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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