Gold prices dropped sharply on Friday, falling 0.6% to $4,154.78 per ounce by 0205 GMT, extending losses for a second consecutive week. The metal was down more than 3% for the week so far, pressured by a stronger US dollar and rises in Treasury yields. US gold futures also slipped 0.4% to $4,184.00.
The US dollar edged higher this week, making gold more expensive for buyers using other currencies. Meanwhile, yields on 10- and 30-year US Treasury bonds hit their highest levels since 2002 on Thursday, increasing the opportunity cost of holding non-yielding assets such as gold.
Kyle Rodda, senior financial market analyst at Capital.com, said market participants were focused on US interest rate expectations and geopolitical tensions in the Middle East. “US nonfarm payroll data will be critical for rate expectations. If it comes in hot, it may increase the likelihood of rate hikes by the Fed. That would potentially weigh even further on gold prices,” he said.
The US Labor Department’s September nonfarm payrolls report is due at 1230 GMT. Recent data showed US inflation rose less than expected in August, with price pressures easing more than initially reported in July. This has contributed to traders pricing in only about a 25% chance of a Federal Reserve rate hike this month, down from roughly 70% earlier in the week. The market still anticipates a 79% chance of a rate increase in December.
Two Federal Reserve policymakers spoke this week, emphasising the need to review more data before deciding on further rate adjustments. Higher borrowing costs typically reduce gold’s appeal since it does not pay interest.
Elsewhere, tensions in the Middle East remained elevated. Sources reported that Iran is preparing a broader and more forceful response if the US resumes large-scale military action, while continuing diplomatic efforts that Iranian officials privately view as unlikely to succeed.
Other precious metals also declined. Spot silver fell 0.5% to $60.53 per ounce, platinum dropped 0.4% to $1,716.93, and palladium rose 0.1% to $1,172.80. All three metals were on track for weekly losses.
The combination of a firmer dollar, rising US Treasury yields, and cautious Fed sentiment has weighed on gold this week as investors await the September payroll figures for clearer signals on monetary policy.
According to Joy Online.
