On Friday, the precious safe-haven gold futures’ prices had tumbled more than 2.5 per cent, falling to a nearly one-month low, as a strong US non-farm payrolls data for July had reinforced a case for the US Federal Reserve to begin taper-talks which could dent the yellow metal’s safe-haven appeal.
Besides, most of the job gains in July had been in tourism and leisure sector which usually are not subject to inflationary pressure, adding further strains on gold’s prices. On top of that, optimisms over a pluperfect economic landscape in the United States which followed a Government report that the US economy’s gross output had blown past a pandemic-led contraction after gaining as much as 6.5 per cent in second quarter, had led to a meteoric upsurge in American currency, dampening a safe-haven appeal for the precious yellow metal.
On a technical viewpoint, gold has always been contemplated as a hedge against higher inflation, however a tapering of fiscal support in a near-term could have spooked investors on whether to cling on to the bullion with vaccination drives easing fiscal pressures across advanced economies, however, a rate hike from the US Fed would likely to entice more traders towards the precious metal.
Earlier in the day, US Labour Department said in a statement that its closely monitored nonfarm payrolls rose solidly last month with American employers adding 943,000 jobs in July, the strongest since August 2020, while unemployment rates fell to a 16-month low of 5.4 per cent.
Gold ebbs off after solid US job growth in July
Citing statistics, on Friday’s commodity market wind-down, spot gold prices pummelled 2.4 per cent to $1,761.44 an ounce, the lowest level in more than a month, while US gold futures’ prices settled 2.5 per cent down at $1,763.00 an ounce.
On the week, spot gold fell 2.90 per cent, the largest weekly decline in more than a month and a half. Among other precious metals, silver dropped 3.2 per cent to $24.33 an ounce, while platinum shed 2.2 per cent to $983.53 an ounce, reporting its worst weekly percentage decline since June.
Meanwhile, citing possibilities of further downward spiral in gold futures’ prices, a senior market analyst at OANDA, Edward Moya said, “Gold could fall towards $1,700 in the near-term, however, we’re still going to see tremendous amount of support getting pumped into the global economy, and that still should support gold”.