Weekly Round-Up: Gold Price Hits Two-month Low on Rate Hike Worries

The gold price edged lower on Friday after a stronger-than-expected US jobs report increased fears of another rate hike.

gold price silver copper oil

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 concerns of 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.

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 the “flash 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 Friday after official data showed a rise in US crude production, offsetting OPEC’s efforts to balance the market.

August West Texas Intermediate crude dropped $1.35 cents, or 3 percent, to $44.17 a barrel on the New York Mercantile Exchange, while Brent crude for September delivery on London’s ICE Futures exchange decreased $1.47, or 3.1 percent, to $46.64 a barrel.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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Weekly Round-Up: Gold Price Set for First Monthly Decline in 2017

By Priscila Barrera, June 30, 2017

The gold price edged lower on Friday (June 30), and was on track for its first monthly loss this year. Hawkish comments from leading central banks this week pushed bond yields higher and hurt gold.

News that the world’s biggest banks are moving to tighten policy measures comes just after the US Federal Reserve decided to raise interest rates for the second time this year. Despite an economic slowdown at the start of 2017, more hikes are expected this year.

“We still have two rate hikes factored in for the Fed in the second half of the year, and we expect some reduction of the balance sheet,” Capital Economics analyst Simona Gambarini said.

“At the same time, in the UK and Europe, although policy will remain loose for some time, it will start to turn the other way,” she added. “So all in all, it doesn’t bode so well for gold prices.”

But a weaker US dollar supported gold this week, as a softer greenback makes commodities priced in dollars cheaper for buyers using weaker currencies. The dollar is on course for its worst quarter in seven years.

“Support to start this year has rested in a weaker U.S. dollar and low real interest rates,” Rob Haworth, senior investment strategist at US Bancorp Wealth Management, told Marketwatch. But “looking to the back half of the year, these drivers seem unlikely to be repeated.” 

As of 1:00 p.m. EST on Friday, the gold price was at $1,242.40 per ounce.


Looking over to silver, the metal was on track for a modest weekly gain, also supported by a weaker US dollar. That said, the white metal has so far seen the biggest fall among precious metals in the second quarter, down nearly 9 percent. As of 1:00 p.m. EST on Friday, the silver was at $16.64 per ounce.

Palladium was down 0.3 percent on Friday, trading at $844.75 per ounce, while platinum was flat at $919.75 per ounce.

On the base metals side, copper prices pulled back from a three-month high on Friday, pressured by a rise in inventories. London Metal Exchange benchmark copper closed down 0.1 percent, at $5,936 a tonne.

Lastly, spot oil rebounded on Friday after official data showed that US crude production dropped by 100,000 barrels a day last week.

August West Texas Intermediate crude gained 31 cents, or 0.7 percent, to reach $45.24 a barrel on the New York Mercantile Exchange, while Brent crude for August delivery on London’s ICE Futures Exchange added 17 cents, or 0.4 percent, to hit $47.59 a barrel.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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