As indicators of a robust U.S. economy and employment market fueled concerns about increasing interest rates, gold prices continued to decline on Thursday and were suffering significant weekly losses. Over the past two days, the price of gold has dropped by around $30, with December futures moving farther away from the crucial $2,000 per ounce …
As indicators of a robust U.S. economy and employment market fueled concerns about increasing interest rates, gold prices continued to decline on Thursday and were suffering significant weekly losses. Over the past two days, the price of gold has dropped by around $30, with December futures moving farther away from the crucial $2,000 per ounce level as statistics revealed that private payrolls increased significantly more than anticipated in July. The reading increased fears about a tight job market and strengthened the dollar ahead of Friday’s official release of nonfarm payrolls data. The dollar’s strength caused most metal prices to decline. As of 20:51 ET (00:51 GMT), spot gold was unchanged at $1,935.41 per ounce, while gold futures were down 0.2% at $1,970.75 per ounce.
After the United States’ credit rating was downgraded, the dollar strengthened, and gold received little love. Even while Fitch’s reduction of the U.S. sovereign rating caused risk aversion in other financial markets, the yellow metal didn’t see much demand as a safe haven. Analysts, however, claimed that the decision was primarily motivated by worries about overspent fiscal spending and political squabbles over policy and would have little meaningful impact on financial markets. With assistance from far stronger-than-anticipated payroll statistics reported by ADP, the dollar surged past the Fitch cut. The number came after statistics earlier in the week indicated some early signs of a manufacturing and construction rebound in the United States.
The statistics sparked wagers that the Federal Reserve will have enough capacity in the economy to raise rates further and maintain them there, which is bad news for the gold and metal markets. Rising interest rates increase the potential cost of owning bullion and make the currency appear more secure to investors than gold. Additionally, the markets anticipate a 25 basis point interest rate increase from the Bank of England later today. Copper is under pressure as prospects for Chinese stimulus fade. Among industrial metals, copper prices plunged this week as a result of a combination of the strengthening dollar and dwindling expectations for additional Chinese assistance. After falling 4% over the previous three days, copper futures were unchanged at $3.8468 per pound. Chinese leaders promised to implement further policy steps to boost the economy, but they provided little specifics on how these actions will be implemented. The nation’s economic figures also indicated that corporate activity was continuing to drop.
Risk Disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. Therefore, it is essential that you carefully evaluate your financial situation and conduct thorough analysis, or seek advice from a qualified professional, before making any investment decisions.
