Gold dips 1% as robust US jobs data eases recession concerns
Add BT as a preferred source
GOLD prices extended losses to slide more than 1 per cent on Friday (Aug 5) as an encouraging US jobs report eased recession worries and raised hopes the Federal Reserve will stick to its aggressive tightening path.
Spot gold fell 1.2 per cent to US$1,769.99 per ounce by 09.31 am (1331 GMT). Prices were up 0.4 per cent so far this week. US gold futures eased 1.3 per cent to US$$1,782.60.
“Gold had recently rallied on the thought that the Fed will shift from hawkish to dovish. But the jobs data shows the US economy is strong, and this can prompt Fed to be more aggressive — which is not a good story for gold,” said Bart Melek, head of commodity strategies at TD Securities.
A high interest rate environment hurts bullion as it yields no interest.
US employers hired far more workers than expected in July, with the unemployment rate falling to a pre-pandemic low of 3.5 per cent.
A positive employment picture gives the Fed further scope for future rate rises without risking tipping the economy into recession, and gold’s upside gains are likely to be capped at US$1,800, Rupert Rowling, market analyst at Kinesis Money, said in a note. The US dollar index was up 1.1 per cent, making gold more expensive for overseas buyers, while US Treasury yields extended their rise after the data.
On the physical side, gold premiums in China rose this week on safe-haven demand driven by rising tensions with the United States over Taiwan.
“If there is a pop-up in geo-political issues, then this will help gold, but it won’t be a sustained rally ... The next catalyst for gold prices will be (the) US CPI print coming out next week,” Melek added, referring to consumer prices.
Spot silver fell 2.5 per cent to US$19.64 per ounce, and was headed for a weekly decline.
Platinum fell 0.2 per cent to US$924.14 but was on track for its biggest weekly gain since early June.
Palladium jumped 1.6 per cent to US$2,096.07. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
