The gold price hit a two-month low on Friday (July 7), and was on track for its fifth weekly loss. A solid US jobs data report fueled concernsof another US interest rate increase later this year, a bearish sign for gold.
We have a stellar US jobs number, said Naeem Aslam, chief market analyst at Think Markets. The data has brought negative news for gold traders as there isn’t really anything in this number which is going to put the brakes on an interest rate hike.
Last month, the US Federal Reserve increased interest rates for the second time in 2017, and expectations of another hike when policymakers meet again in September are now higher.
That could be bad news for gold, which tends to fare better when interest rates are low and often struggles when interest rates increase. That’s because higher rates curb the investment appeal of non-interest-bearing assets like gold.
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Other leading banks are also likely to follow the Fed and move to tighten policy measures.
Some believe that rate tightening will still happen and stimuli be dropped by the main developed world central banks, but there’s always the chance that the moves could be postponed, Julian Phillips, co-founder of Gold Forecaster told Marketwatch. So global financial uncertainty remains a concern in the developed world.
A stronger US dollar also hurt gold this week, as a higher greenback makes commodities priced in dollars more expensive for buyers using weaker currencies.As of 12:30 p.m. EST on Friday, the gold price was at $1,211.44 per ounce.
Looking over to silver, futures dropped as much as 10 percent early on Friday, hitting$14.34 an ounce, the lowest since February 2016. However, prices quickly rebounded after theflash crash, likely set off by a trading error. As of 12:30 p.m. EST on Friday, the white metal was sitting at $15.54.
Palladium was down 0.3 percent on Friday, trading at $832.25 per ounce, while platinum dropped to $902.74 per ounce.
On the base metals side, copper prices pulled back from a one-week low on Friday, supported by threats of strikes in Chile. London Metal Exchange benchmark copper closed 0.4 percent down at $5,828 a tonne.
Lastly, spot oil traded lower on