Gold Soars on Weakening Dollar and Slowing US Economy
Gold prices surged this week in India as the US dollar weakened and weaker-than-expected US labor data cut the odds of further US Federal Reserve tightening. The price of gold futures (October) on the Multi Commodity Exchange (MCX) gained 0.11% on Friday, while silver futures (September) advanced 0.15%. The price of 10 grams of 24-carat gold stood at Rs 1,49,621 on Friday, up from Rs 1,42,863 seen on Monday at market opening.
The US employment report showed the economy unexpectedly lost 23,000 jobs in July, compared to forecasts for an increase of about 80,000. This softer labour picture, together with weaker ADP private payrolls and other employment indicators, trimmed market expectations for a September Fed rate hike to about 44% from roughly 58%. As a result, Treasury yields fell, creating a supportive backdrop for precious metals.
Gold, which had started the week under pressure as geopolitical risk premiums eased following the postponement of a planned US strike on Iran, staged a sharp reversal after the employment report. The yellow metal climbed to a seven-week high as inflation remains a key risk, suggesting that the Federal Reserve's next policy move will continue to depend on upcoming inflation and labour-market data.