Gold prices saw their steepest weekly drop since January, partly due to the rising strength of the dollar
Gold and silver prices saw a modest increase on Friday after the U.S. released weaker-than-expected jobs data, though they still ended the week with significant losses.
Despite growing tensions in Iran, gold had difficulty drawing substantial safe-haven interest throughout the week. A slight recovery occurred on Friday, but overall, gold's performance fell short, likely leaving some investors dissatisfied.
Gold futures rose by $80, or 1.6%, to close at $5,158.70 per ounce on Friday. However, for the week, gold experienced a 2.3% decrease, marking its sharpest weekly decline since late January and breaking a four-week winning streak, as reported by Dow Jones Market Data.
Silver futures exhibited a similar trend, increasing by $2.13, or 2.6%, reaching $84.31 per ounce by the end of Friday's trading. Despite this rise, silver faced a steep weekly drop of 9.3%, its worst since January 30, ending its four-week rally.
In February, the U.S. economy lost 92,000 jobs, contrasting significantly with forecasts predicting a 50,000-job increase. Typically, such disappointing job numbers might bolster the case for the Federal Reserve to reduce interest rates. In response to the data, gold prices initially jumped but later fell from their peak highs.
However, the potential for interest rate cuts has been overshadowed by rising oil prices and increasing inflationary pressures. These factors follow U.S. and Israeli military actions in Iran that began last weekend. On Friday, oil prices rose again, with U.S. benchmarks achieving their largest weekly percentage gain on record. The ongoing conflict shows little sign of resolution, raising concerns about possible disruptions in production.
For further details: Oil continues its historic weekly climb as Middle East tensions increase fears of supply disruptions.
Gold is making gains but remains on track for a weekly decline
Current developments show gold prices edging upwards this morning, yet they are set for a weekly dip after enjoying a five-week rise.
The slight increase in gold value has been propelled by escalating geopolitical tensions, prompting investors to turn to safe-haven assets. Nevertheless, the strength of the US dollar has limited further gains. Additionally, concerns over rising inflation, spurred by soaring energy costs, have led investors to temper their expectations for potential interest rate cuts from the Federal Reserve.
In recent events, the situation in the Middle East has become increasingly intense, with the US-Iran conflict now in its sixth day. Iran has conducted multiple missile attacks on Israel, prompting retaliatory strikes from Israel targeting Iranian internal security forces. Further hostilities included Iranian drone attacks damaging an oil refinery in Bahrain and an oil spill from a tanker explosion near Kuwait. Iran is also reportedly preparing for the funeral of Supreme Leader Ali Khamenei.
Gold has often been considered a safe-haven asset, reaching several records this year amid ongoing economic and geopolitical uncertainties. While the turmoil in the Middle East has increased demand for these assets, it has also pushed oil prices higher, exacerbating inflation concerns. This has reduced speculation about impending US interest rate reductions, as higher rates typically dampen demand for non-yielding assets like gold.
Adding to the complexity is robust economic data from the United States. Weekly jobless claims have held steady at 213,000 for the last week of February, surpassing market expectations of 215,000. Job cuts fell significantly to 48,307 in February from 108,435 in January, and sharply down from 172,017 a year ago. Meanwhile, US export prices increased by 0.6% in January, exceeding the anticipated 0.3%, with import prices rising by 0.2%. Labor productivity also improved by 2.8% in the fourth quarter, surpassing forecasts of 1.9%.
Global gold prices
This morning, spot gold prices rose by 1.1% to $5,135.98 per ounce, although they are still heading for a weekly decline due to ongoing macroeconomic and geopolitical pressures.
In other metals trading, silver prices saw a 2.1% increase, reaching $83.95 per ounce. Platinum went up by 1.7% to $2,157.55 per ounce, and palladium rose by 1.5% to $1,659.46 per ounce.
Key areas to keep an eye on include the continuing tensions in the Middle East, changes in crude oil prices, and fluctuations in the value of the US dollar.
Gold prices update
The US is set to release key data today at 5:30 PM UAE Time, covering nonfarm payrolls and retail sales. Economists expect the US economy to have added 59,000 jobs in February, a noticeable decrease from the 130,000 jobs added in January. The unemployment rate is anticipated to hold steady at 4.3%, with wages likely to increase by 0.3% after a 0.4% rise in January. Moreover, US retail sales, which showed no change in December, are forecasted to decline by 0.3% in January.