Gold mostly likely to end 4th week in red

7 Jul 2023 , 11:50 AM

As investors anticipated the Federal Reserve’s commitment to keeping interest rates higher for a longer duration, the price of gold was poised to decline for the fourth consecutive week on Friday.

Spot gold remained unchanged at $1,911.85 per ounce but recorded a 0.4% decline for the week. U.S. gold futures experienced a 0.1% increase, reaching $1,917.70.

Despite concerns of a potential recession due to increasing interest rates, U.S. private payrolls exceeded expectations in June, indicating strength in the labor market.

During the June policy meeting, Fed Bank of Dallas President Lorie Logan stated the case for raising interest rates, emphasizing the need for additional rate hikes to slow down the still-strong economy.

The rising U.S. interest rates have a significant impact on the price of gold as the opportunity cost of holding non-yielding bullion increases.

Following the pause last month, investors currently estimate a 92% probability of a 25-basis-point rate increase in July, according to CME’s Fedwatch tool.

In response to Thursday’s labor market data release, the yield on 10-year Treasury notes reached its highest level since March 2.

Investors will closely monitor U.S. Treasury Secretary Janet Yellen’s visit to Beijing amidst heightened tensions as they seek further clarity from the U.S. nonfarm payrolls report scheduled for release on Friday.

According to a Friday article in the Nikkei newspaper, Bank of Japan’s Deputy Governor Shinichi Uchida pledged to maintain the bank’s yield curve control policy for the foreseeable future.

Silver spot prices declined by 0.2% to $22.6994 per ounce, while platinum prices remained relatively stable at $901.18. Palladium dropped by 0.2% to $1,238, but was still expected to register a weekly gain of 1%.

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