While gold finished a bit lower over the weekend thanks to higher-than-expected jobs numbers out of the US, watchers are still expecting the Fed to lower rates.
Four month gold contracts shed 1.5 percent while prices ended the weekend down 0.9 percent, largely thanks to stronger-than-expected job numbers out of the US.
Dow Jones has reported that figures released Friday US time essentially pushed up Treasury bond yields and the dollar — which subsequently sent the gold price down.
Gold, aside from being a safe-haven hedge against geopolitical turmoil, becomes more attractive when interest rates are lower — as lower-risk investments become less attractive.
While the jobs numbers made the chance of a rate cut from the US Federal Reserve less likely in the short term, Dow Jones said analysts were still in agreement that the Fed would lower rates.
It’s just a matter of when.
“Contained wage growth and muted inflation have also prompted bets on lower interest rates, potentially boosting gold moving forward,” it wrote.
“Investors will weigh minutes from the Fed’s last meeting and fresh inflation data next week to gauge the trajectory of the U.S. economy and interest-rate policy.”
Gold has been on a run of late, with forward contracts pushing through the mythical $US1400 per ounce ($A2004/oz) mark.
Chart of Comex contracts, from MarketWatch
It’s prompted several commentators to call a new bull market for gold, with one notably calling gold “way too cheap”.
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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