Gold closed down this Friday (2), amid a strong dollar abroad and a jump in Treasury yields (public debt fixed income securities of the US government), after employment data in the US strengthens the prospect that the Federal Reserve (Fed, the country’s central bank) will maintain restrictive interest rates for an extended period of time. However, the precious metal held on to weekly gains, consolidating prices around the $2,000 level.
On Comex, the metals division of the New York Mercantile Exchange (Nymex), gold scheduled for delivery in May closed down 0.84%, at US$2,053.70 per troy ounce. In the weekly comparison, the contract advanced 1.80%.
Today, gold maintained its consolidation trajectory, as classified by Goldman Sachs, with the strong dollar and the robust rise in interest rates on Treasuries, rivals of the precious metal in the safe assets segment.
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American assets were supported by the surprising strength of the US jobs (payroll) report, which exceeded the ceiling of Broadcast Projections expectations by showing creation of 353 thousand jobs in January. The resilience of the labor market reinforced the perspective that the Fed will take longer to cut interest rates, as indicated by the president of the American Central Bank, Jerome Powell, in a press conference. Last Wednesday (31), leaders chose to maintain rates and reiterated that they needed more evidence of a sustained return of inflation to 2%, before discussing cuts.
For Goldman Sachs, this scenario should keep gold prices operating sideways in the short term, but any significant decline “will be limited by robust support from other factors”, for example, the still high physical and retail demand for the metal.
In a note, Commerzbank notes that demand for gold remained high throughout last year and reached a record of 4.9 tons in 2023, due to purchases by central banks. The German bank predicts that BCs should make large purchases of gold again, but not at the same pace as last year. Commerzbank also noted that the silver market will continue to experience significant supply bottlenecks in the face of growing demand throughout 2024, which should support an escalation in prices until reaching the level of US$30 per troy ounce at the end of the year.