Gold prices saw a slight decline on Friday, following the release of a stronger-than-anticipated U.S. jobs report that intensified speculation regarding the Federal Reserve’s stance on interest rates. As of 0242 GMT, spot gold was down 0.1%, trading at $4,072.87 per ounce, while U.S. gold futures for December delivery experienced a marginal increase of 0.3%, reaching $4,071.90 per ounce.
According to Brian Lan, Managing Director of GoldSilver Central, the gold market is currently in a phase of consolidation. He pointed out that the strengthening of the dollar is a contributing factor, alongside ongoing speculation about the Fed’s potential interest rate actions. The end of December is approaching, prompting many traders to take profits from their positions, a trend that has been observed from the end of last week into this week.
The U.S. dollar index was on course for its strongest weekly performance in over a month, which poses challenges for gold priced in dollars. A stronger dollar typically raises gold’s price for investors using other currencies. The U.S. Labor Department’s report released earlier—delayed due to the federal government shutdown—revealed that nonfarm payrolls rose by 119,000 in September, significantly surpassing the estimated increase of 50,000.
Market expectations have shifted, with traders now estimating nearly a 39% probability for a Fed rate cut in the coming month. Typically, gold performs better in low-interest-rate environments, reinforcing its appeal as a non-yielding asset.
Minutes from the Fed’s October meeting, released on Wednesday, indicated that while there was a discussion around cutting interest rates, there were also cautions against the potential risks it poses, including persistent inflation and the possible erosion of public trust in the central bank. Chicago Fed President Austan Goolsbee expressed his concerns on Thursday, stating his unease with the notion of preemptively reducing interest rates, particularly in light of stalled progress toward the Fed’s 2% inflation target.
In the broader precious metals market, spot silver saw a decline of 0.5%, trading at $50.35 per ounce. Meanwhile, platinum prices increased by 0.4% to $1,521.41 per ounce, and palladium remained unchanged at $1,377.50 per ounce.
