As US data suggest further Fed tightening, gold prices are approaching 3-week lows

3 Aug 2023 , 09:51 AM

On Thursday, gold prices remained close to three-week lows as a larger-than-expected rise in private payrolls in the United States in July fuelled speculations on further monetary policy tightening and increased the value of the currency and bond yields.

Spot gold was trading near its lowest level since July 12 reached in the previous session at $1,935.20 per ounce. To $1,970.90, U.S. gold futures declined by 0.2%.

On Wednesday, following data indicated that U.S. private payrolls increased by 324,000 jobs in November, more than the growth of 189,000 jobs predicted by Reuters, the benchmark 10-year Treasury yields reached their highest level since November.

Although the markets largely ignored Fitch’s downgrading of the U.S. credit rating on Wednesday, investors said they anticipated long-term uneasiness about the nation’s debt position, political polarization, and the value of the U.S. dollar globally.

According to FX strategists surveyed by Reuters, the U.S. dollar will maintain its position versus the majority of foreign currencies over the next three months as a robust domestic economy supports hopes interest rates would remain higher for longer.

Gold is frequently sought after as a secure investment during periods of financial and economic unpredictability, but its appeal tends to wane when interest rates rise since it offers no return.

The Bank of England is anticipated to boost interest rates to a 15-year high on Thursday, while there is a chance that the surprise half-point hike from June will be repeated given that inflation in the UK is still the highest among the major countries of the world.

The largest palladium producer in the world, Russian miner Nornickel, reported that for the first time, Asia was the company’s main revenue market.

The ounce price of palladium dropped by 0.5% to $1,237.19.

Silver spot prices fell by 0.1% to $23.72 per ounce, and platinum prices fell by 0.4% to $917.74. The prices of both metals were the lowest they have been in nearly three weeks.

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