Gold posted the longest run of weekly losses since September as surprisingly better US job numbers provided further signs that the global economy is picking up faster than anticipated, curbing haven demand.
A key gauge of payrolls rose by 2.5 million, trouncing forecasts for a sharp decline following a 20.7 million tumble the prior month. The jobless rate fell to 13.3 percent from 14.7 percent.
“The US unemployment rate has shocked everyone because the number was much lower than the market expectation,” Naeem Aslam, chief market analyst at Ava Trade, said in an e-mailed message. “This is a mind-blowing number and shows that the economy is improving.”
After climbing to a seven-year high in April, bullion’s haven appeal has weakened as more economies reopen awash with stimulus following COVID-19 lockdowns. Global equities are near the highest since early March amid optimism for a quick economic recovery, and holdings in gold-backed exchange-traded funds fell for the first time since April on Thursday, ending the longest run of inflows in more than a year.
Spot gold closed was 2.09 percent lower on Friday at 1,677.93, a weekly decline of 2.98 percent
A Bloomberg Intelligence index of senior gold miners also took a hit, falling 4.7 percent so far this week and heading for the worst such drop since March.
The index was dragged lower in part by Agnico Eagle Mines Ltd’s 13 percent decline in Toronto and Newmont Corp’s 7.9 percent loss in New York.
Still, US-China tensions, risks around the global recovery and expectations of more stimulus might support prices. The European Central Bank on Thursday announced a larger-than-expected boost to bond-buying and investors are awaiting plans for the next round of US stimulus.
Even though gold prices might face a near-term correction, the metal could climb toward a record in the second half of this year as yields remain low and real rates remain negative, Metals Focus director Nikos Kavalis said.
Some banks have raised forecasts on the metal. J.P. Morgan Asset Management changed its recommendation on gold and other precious metals to overweight, and Credit Suisse raised its price expectations, seeing the metal averaging as high as US$1,800 an ounce next year, a Friday research note said.
Both banks see US dollar weakness and inflationary pressures supporting prices.
Other commodities:
‧Silver for July delivery fell US$0.58 to US$17.48 an ounce and July copper rose US$0.07 to US$2.56 a pound.
Additional reporting by AP
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