3 weeks ago
Gold gains 4.73% as US labour data weakens Fed rate hike bets
Gold is a shiny treasure that many people like to save.
This week, gold became more valuable in India and around the world.
One reason is that America's central bank, called the Fed, decides if borrowing money should cost more or less.
A new report showed that fewer Americans got new jobs than people expected.
Because of that, the Fed probably will not raise rates as much, so gold became more attractive.
When the US dollar became weaker, gold also got cheaper for buyers using other money, which pushed its price up.
In India, prices for 10 grams of 24-carat gold jumped from about Rs 1,42,863 to Rs 1,49,621.
Silver went up a little too.
People are now watching new inflation numbers to guess what the Fed will do next.
Gold prices rose 4.73 per cent over the week, driven by a weaker US dollar and soft US labour data.
On Friday, MCX gold futures (October) stood at Rs 1,51,985 while silver futures (September) were at Rs 2,31,804 per kg.
The US economy added just 23,000 jobs in July against forecasts of about 80,000, with revisions wiping out 1,03,000 jobs.
Market expectations for a September Federal Reserve rate hike fell to about 44 per cent from roughly 58 per cent.
Gold climbed to a seven-week high after the employment report, with COMEX resistance at $4,470-$4,500 and support at $4,330-$4,300.
- Who
- Investors, the Federal Reserve, and participants on India's Multi Commodity Exchange (MCX).
- What
- Gold and silver prices surged, with gold posting a 4.73 per cent weekly gain.
- Where
- Mumbai, India, where the MCX trades gold and silver futures.
- When
- During the current trading week, ending Friday, when gold climbed to a seven-week high.
- Why
- A weaker US dollar and a softer-than-expected US jobs report reduced the odds of further Federal Reserve tightening.
Rate hike bets weakened
Inflation remains a key risk
Impact of jobs data on Fed policy
Rate hike bets weakened
Weak US labour data slashed the odds of a September Fed rate hike to about 44 from ~58 per cent, and gold rallied as Treasury yields fell.
Inflation remains a key risk
Inflation remains a key risk, so the Federal Reserve's next move will still depend on upcoming inflation and labour-market data.
Key facts
- Weekly gain
- Gold +4.73%
- MCX gold futures (October)
- Rs 1,51,985
- MCX silver futures (September)
- Rs 2,31,804 per kg
- 24-carat gold (10 grams)
- Rs 1,49,621 (IBJA data)
- US July jobs report
- 23,000 jobs added vs ~80,000 forecast; revisions erased ~1,03,000 jobs
- Fed rate hike odds (September)
- Fell to ~44% from ~58%
- 10-year Treasury yield
- Eased to ~4.60% from intraday high of 4.68%
- COMEX gold levels
- Resistance $4,470-$4,500; support $4,330-$4,300
Quotes
Analyst
Financial market analyst commenting on US labor data
“"Earlier payroll data were also revised sharply lower, with revisions to the previous two months wiping out roughly 1,03,000 jobs," an analyst said.”
thehansindia.com
Sources
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