Gold prices experienced their sharpest weekly decline since January, with some of the downturn attributed to the strengthening dollar.
Gold and silver prices edged higher on Friday following the release of weaker-than-expected U.S. jobs data but ended the week with notable losses.
Despite escalating tensions in the Iran conflict, gold struggled to attract significant safe-haven demand throughout the week. While the precious metal saw a slight rebound on the final trading day, it generally underperformed, likely leaving some investors disappointed.
Gold futures climbed $80, or 1.6%, closing at $5,158.70 per ounce on Friday. However, for the week, gold registered a 2.3% decline, marking its steepest weekly drop since late January and breaking a four-week winning streak, according to Dow Jones Market Data.
Silver futures followed a similar pattern, rising $2.13, or 2.6%, to $84.31 per ounce by the end of Friday’s session. Nevertheless, silver suffered a sharp weekly decline of 9.3%, its worst since January 30, putting an end to its four-week rally.
The U.S. economy shed 92,000 jobs in February, contrasting sharply with economists' forecasts of a 50,000-job increase. Typically, a disappointing jobs report might strengthen the argument for the Federal Reserve to lower interest rates. In response to the data, gold prices initially surged but later retreated from session highs.
However, prospects for interest rate cuts have been clouded by soaring oil prices and rising inflationary pressures. These developments follow U.S. and Israeli military actions in Iran that commenced last weekend. On Friday, oil prices (CL00) (CL.1) climbed once more, with U.S. benchmarks achieving their largest weekly percentage gain on record. The ongoing conflict offers little sign of resolution, fueling concerns about potential production disruptions.
For further details: Oil rallies toward a historic weekly gain as Middle East tensions heighten fears of supply cuts.
Gold gains ground but stays positioned for a weekly drop
What’s happening:-
Gold prices inched higher this morning but remain poised for a weekly decline following a five-week winning streak.
The uptick in gold was driven by heightened geopolitical tensions, which spurred investors to seek safe-haven assets. However, gains were capped by the recent strength of the US dollar. Additionally, concerns about rising inflation—fueled by surging energy costs—led investors to scale back their expectations for interest rate cuts from the Federal Reserve.
What happened:-
The situation in the Middle East continues to intensify, with the US-Iran conflict entering its sixth day. Iran has carried out a series of missile attacks on Israel, while Israel retaliated with strikes targeting Iranian internal security forces. Further escalation saw Iranian drone strikes damaging an oil refinery in Bahrain and an oil spill caused by a tanker explosion near Kuwait. Iran is also reportedly preparing for the funeral of Supreme Leader Ali Khamenei.
Gold, traditionally regarded as a safe-haven asset, has reached multiple record highs this year amid persistent economic and geopolitical uncertainties. While the ongoing unrest in the Middle East has bolstered demand for such assets, it has simultaneously driven up oil prices, stoking inflationary fears. Consequently, speculation about imminent reductions in US interest rates has diminished, as higher rates generally suppress demand for non-yielding assets like gold.
Adding to the complexity is strong economic data from the United States. Weekly jobless claims remained steady at 213,000 for the last week of February, outperforming market expectations of 215,000. Job cuts dropped significantly to 48,307 in February from 108,435 in January and down sharply from 172,017 a year ago. Meanwhile, US export prices rose by 0.6% in January, surpassing projections of 0.3%, with import prices gaining 0.2%. Labour productivity also improved by 2.8% in the fourth quarter, beating forecasts of 1.9%.
International gold prices
As of this morning, spot gold prices edged up by 1.1% to $5,135.98 per ounce but remain on course for a weekly decline owing to these macroeconomic and geopolitical pressures.
Elsewhere in metals trading, silver prices climbed 2.1% to $83.95 per ounce. Platinum advanced 1.7% to $2,157.55 per ounce, while palladium increased by 1.5%, reaching $1,659.46 per ounce.
What to watch:-
Key areas to monitor include the ongoing tensions in the Middle East, fluctuations in crude oil prices, and shifts in the US dollar's value.
Gold prices today
Today, the US will release data on nonfarm payrolls and retail sales at 5:30 PM UAE Time. Economists anticipate that the US economy will add 59,000 jobs in February, marking a significant slowdown compared to the 130,000 increase reported in January. The unemployment rate is predicted to stay steady at 4.3%, with wages expected to grow by 0.3% in February, following a 0.4% rise in January. Additionally, US retail sales, which remained flat in December, are projected to drop by 0.3% in January.