After a rough week, the gold price remained under pressure on Friday and was on track for its biggest weekly decline since May.
After a rough week, the gold price remained under pressure on Friday (December 8) and was on track for its biggest weekly decline since May.
According to Reuters, progress on US tax reform is fueling optimism about the US economy and boosting the dollar. Additionally, stronger-than-expected US jobs data, released Friday, has increased the likelihood that the Federal Reserve will raise interest rates as expected next week.
“The solid jobs report implies the Fed can remain on a path of higher interest rates well into 2018,” Rob Haworth, senior investment strategist for US Bank Wealth Management, told MarketWatch. “Higher rates, and higher real rates … are likely pressuring gold.”
MarketWatch also suggests that this week’s bitcoin price surge may have contributed to gold’s poor performance. The yellow metal was changing hands at $1,247.30 per ounce as of 11:00 a.m. EST on Friday after falling below $1,260, the bottom of its trading range since September, earlier in the week.
Price action for silver has been similar this past week. Like gold, the white metal has taken a fairly steep fall, sinking from close to $16.50 per ounce at the beginning of the week to $15.75 by 11:00 a.m. EST on Friday. Click here to read our silver outlook for 2018.
On the base metals side, copper also had a difficult week. Benchmark prices took a steep drop on Tuesday (December 5), hitting a two-month low of $6,533.50 per tonne due to rising inventories and strength in the dollar. “Because of the strength of the dollar this week we are seeing metal prices which are denominated in dollars coming under pressure,” said Fawad Razaqzada, a FOREX.com analyst.
By Friday there had been some recovery, with three-month LME copper up at $6,598. Concerns about demand from China, the world’s largest copper consumer, have also hampered prices.
Finally, oil prices were on the rise on Friday, boosted by increasing demand from China and worries about a potential strike in Nigeria, Africa’s largest oil exporter. The fuel is also still seeing some support from OPEC’s decision to extend output cuts until the end of 2018.
Reuters says that US West Texas Intermediate crude was at $56.66 per barrel on Friday, up 97 cents from its last settlement but on track for a weekly loss. Meanwhile, Brent crude was at $63.24 per barrel, up over a dollar but also on track for a weekly loss.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.