Gold ended up slightly lower on Wednesday as investors waited on Friday’s upcoming jobs report. Weaker-than-anticipated jobs data on the U.S. private sector provided a modest boost for the yellow metal, but Friday’s report is going to go a long way to dictating gold’s short-term value. The report is expected to shed light on the pace of the Fed’s tapering. That, in turn, will drive sentiment on gold.

In an interview with CNBC Barrick Gold CEO Mark Bristow said, “Fundamentally, this world is battling with hard to position investments on the back of the unforeseen and unrealized damage of how the pandemic was managed, and the impact in the global economy really hasn’t materialized yet. Without a doubt you take this as a buying opportunity.” Bristow went on to make a case that gold is a stabilizer against volatility and belongs in any portfolio. He pointed to miners as long-term plays.

U.S. businesses created only 374,000 new jobs in August despite a 600,000 forecast from The Wall Street Journal, according to an ADP survey.

Craig Erlam, senior market analyst at Oanda, said in a market update, “With gold hovering so close to the July highs around $1,833, the jobs data will be huge for the yellow metal, with a break above here putting it firmly back into bullish territory.”

According to a report from the World Gold Council, “the current global economic landscape indicates improving economic conditions, higher inflation and rates expectations, as well as commodity supply shortages which are likely to support commodity performance… gold is still the most effective commodity investment in a portfolio as it continues to stand apart from the commodities complex.” 

Though Gold Lags in Commodity-Led Reflationary Periods, It Overperforms in the Long Run

Even though the past few months feel as though they’ve been lackluster for gold, compared to other major assets and commodities, gold has been more stable and less prone to volatility.

Most recent reflationary periods in the U.S. as of June 30, 2021:

Period StartPeriod EndREITsValue
Equities
Growth
Equities
U.S.
Bonds
BCOMS&P
GSCI
Gold
Nov-01Sep-0639%8%0%5%20%22%24%
Jun-09Apr-1225%16%21%7%5%7%27%
Aug-20Jun-2128%30%19%-1%29%45%-10%

Source: The World Gold Council/Bloomberg. BCOM refers to the Bloomberg Commodity Index. The S&P GSCI is a world production-weighted commodity index based on the average of the previous five years.

Investors can get take advantage of this lull in gold prices and gain through the Sprott Physical Gold Trust (PHYS), which holds physical gold bullion. Sprott also offers two actively managed precious metals mining ETFs: the Sprott Gold Miners ETF (SGDM), which tracks gold majors, and the Sprott Junior Gold Miners ETF (SGDJ), which tracks junior gold miners.

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