On Friday, gold stock (NYSE:GOLD) prices declined, retreating from a peak that had been nearing for about four months. This was because robust U.S. jobs data fueled concerns that the Federal Reserve could continue tightening its aggressive monetary policy.
Gold Price (Gold stock price)
After reaching its highest point since August 10 at $1,804.46 per ounce, spot gold prices declined by 0.4% to settle at $1,794.96 per ounce. Gold futures traded in the United States ended the day down 0.31% at $1,809.6 per ounce.
Despite growing concerns about the possibility of a recession, data indicated that firms in the United States recruited more people than anticipated in November and hiked pay.
“With the U.S. jobs number coming in much stronger than expected…what we’re seeing is the concern that the Fed may need to go further with their expected interest rate hikes,” said David Meger, director of metals trading at High Ridge Future. “With the U.S. jobs number coming in much stronger than expected…what we’re seeing is the concern that the Fed may need to go further with their expected interest rate hikes.”
It’s not only the precious metals complex that will be under pressure today; most asset classes will also be.
While the benchmark yield on U.S. Treasury securities went up, the dollar’s value rose against its competitors by a fraction of one percent.
In addition, the President of the Chicago Federal Reserve, Charles Evans, suggested that there may be “a slightly higher peak rate of the funds rate, even as we presumably would scale down” the pace of rate hikes from 75 basis points. Evans made this statement when speaking at an event.
The Fed funds futures prices still showed a 75% possibility that the central bank would raise its policy rate by 50 basis points to a range of 4.25%-4.5% in the middle of December.
Gold (gold stock) is highly susceptible to changes in interest rates in the United States since an increase in these rates raises the opportunity cost of owning non-yielding metal.
As a result of Federal Reserve Chair Jerome Powell’s dovish speech this week, gold prices continued to seem like they were going to post their second weekly gain in a row, with an increase of 2.2% this week.
The price of spot silver increased by 1.6%, reaching its highest level since May 5 at $23.139 per ounce. Platinum prices decreased by 2.6% to $1,014.25 per ounce, and palladium prices down by 2.1% to $1,901.25 per ounce.
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