Gold prices closed higher Friday, as investors absorbed fresh data showing stronger-than-expected U.S. employment data, but swept to a third straight week of declines.
June gold futures GC00, +0.38% GCM22, +0.38% added to gains after the jobs data, then pared those back. The contract rose $7.10, or 0.4%, to settle at $1,882.80 per ounce. Still, the precious metal lost 1.5% for the week, booking a third straight week of declines. That was its longest weekly stretch of losses for the most-active contract since the Dec. 3, 2021, according to Dow Jones Market Data.
“We do expect more investment demand from gold this year,” said Robert Minter, director of ETF investment strategy at abrdn. He pointed to markets having trouble parsing what the new interest rate regime looks like as central bankers work to cool inflation.
“Clearly, there will be higher interest rates,” Minter said by phone Friday. “Clearly, there will be higher inflation. The question is, are you looking at dramatically higher interest rates.”
Silver futures SI00, -0.33% SIN22, -0.33% closed down 0.3% Friday at $22.367 per ounce, while also booking a third week in a row of declines and its longest such weekly losing stretch since Dec. 10, 2021.
“While wage growth is a clear signal that firms are looking to hire, it could exacerbate the inflationary pressures already present in the economy,” Doug Duncan, chief economist at Fannie Mae, wrote in emailed comments after the jobs report. “Overall, we believe this report will not alter the Federal Reserve’s plan to continue to raise the policy rate multiple times over the coming months.”
U.S. stock indexes SPX, -0.57% DJIA, -0.30% COMP, -1.40% remained under pressure Friday, heading for mixed weekly performance, while the dollar DXY, -0.09% headed for a 0.6% weekly rise. The benchmark 10-year Treasury rate TMUBMUSD10Y, 3.127% climbed to 3.12% Friday. A strong dollar and higher Treasury yields can dull demand for gold and other nonyielding assets.
In addition to the week’s Fed rate hike, the Bank of England also raised interest rates for the fourth time, while offering a bleak economic forecast that triggered a plunge in the pound GBPUSD, -0.15% and surge in the dollar. The European Central Bank is also expected to raise rates in July. The Bank of England’s gloom contrasted with the Fed’s position that it can keep a recession at bay.
“Gold is struggling to gain traction in this environment of rising interest rates and now looks set for a sustained period below $1,900 an ounce,” Rupert Rowling, market analyst at Kinesis Money, in a note to clients. “While the bullish support of the ongoing war in Ukraine will limit how far gold declines, this is currently outweighed by the bearish driver of central banks tightening their monetary policy-making non-yield bearing assets such as gold less attractive,” he said.
In other metals trade, July copper HGN22, -1.00% slipped 0.5% to settle at $4.267 a pound.
July platinum PLN22, -2.67% fell 1.% to end at $956.00 an ounce, while June palladium PAM22, -6.68% fell 7.1% to $2,023.20 an ounce.