Gold prices fell more than 1% on Friday (November 21) and are set for a weekly decline after a strong US jobs report dampened expectations of a Federal Reserve rate cut next month, weighing on the non-yielding precious metal.
Spot gold fell 0.7% to $4,047.14 an ounce, as of 09:09 GMT, after falling more than 1% earlier in the session. Bullion prices have fallen 0.5% this week. US gold futures for December delivery fell 0.4% to $4,044.50 an ounce.
"The prospect of further rate cuts is somewhat tempered by the good labor market data released yesterday. I think that's the main factor" weighing on gold, said Nitesh Shah, commodity strategist at WisdomTree.
MIXED VIEWS ON THE US LABOR MARKET
The delayed US jobs report on Thursday offered a mixed outlook on the labor market, with non-farm payrolls increasing by 119,000, compared to expectations of 50,000, but the unemployment rate hitting a four-year high.
The next jobs report will be released only after the Fed's December meeting, where traders now see a 33% chance of a rate cut, down from 44% last week.
Gold, a non-yielding asset, tends to perform well in low-interest rates. Cleveland Fed President Beth Hammack, who opposed the Fed's latest rate cut, warned on Thursday against lowering borrowing costs further due to inflation.
Meanwhile, physical gold demand in key Asian markets remained weak this week, as interest rate volatility deterred potential buyers.
FUNDAMENTALS INTACT
However, gold's fundamentals remain intact, and "factors such as slowing economic growth, expensive stock market valuations, geopolitical uncertainty, and diversification away from US assets are likely to maintain strong investment demand and central bank buying," ANZ said in a note.
"I think gold prices are currently at a low point. Prices may fall slightly temporarily, but generally speaking, they will be higher in the coming months," said Shah of WisdomTree.
Elsewhere, spot silver fell 2.1% to $49.55 an ounce, platinum rose 0.2% to $1,515.25, and palladium fell 0.2% to $1,375. (alg)
Source: Reuters.com
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