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Weekly Round-Up: Gold Price Hurt by US Jobs Data
As of 11:50 a.m. EST on Friday, the gold price was changing hands at $1,089 per ounce — that’s down from about $1,107 prior to the data’s release.
The gold price took a big fall last week after the US Federal Reserve decided not to raise interest rates, and it’s continued to drop since then.
Most recently, it took another steep drop Friday morning on the back of better-than-expected US jobs data. As of 11:50 a.m. EST on Friday, the gold price was changing hands at $1,089 per ounce — that’s down from about $1,107 prior to the data’s release, and down from around $1,140 at the beginning of the week.
It might seem strange that the Fed’s decision not to raise rates has led to a downtick in the gold price. After all, low interest rates are typically positive for precious metals. Analysts have explained the unusual behavior by pointing out that many investors now believe the Fed may hike rates at its next meeting, scheduled for December 15 to 16.
That idea was reinforced by Friday’s positive jobs data, which shows that 271,000 non-farm jobs were added to the US economy in October, well above expectations of about 180,000. Meanwhile, the unemployment rate dropped to 5 percent, while payrolls data for August and September was revised to show that 12,000 more jobs were created than was previously reported.
“The health of the U.S. labor market is a key factor in the Federal Reserve’s thinking,” Reuters states, and many are now concerned that the central bank is likely to raise rates before the end of the year.
The silver price also took a hit after US jobs data was released, plummeting from about $15 per ounce down to $14.67 at 12:30 p.m. EST. At the beginning of the week, the white metal was changing hands at about $15.50.
On the base metals side, the copper price also hasn’t fared well this week. Though some major miners announced production cuts this week, LME copper nevertheless sank as low as $5,082 per tonne on Thursday on the back of US dollar strength. COMEX copper fared little better, sinking 1.56 percent to reach $2.286 per pound.
Finally, US jobs data also pushed the oil price down on Friday. According to The Wall Street Journal, light, sweet crude for December delivery was down $0.69, trading at $44.51 per barrel on the NYMEX. Similarly, Brent crude was down $0.43, selling for $47.55 on the ICE Futures Europe.
A December rate hike could be damaging for oil as well as precious metals. “Throw in the likelihood of a stronger dollar as a result of a Federal Reserve interest rate increase in December and the first half of next year looks like a distinctly dangerous period for oil bulls,” David Hufton of brokerage PVM told the news outlet.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
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