Gold futures faced a third consecutive day of declines on Thursday, September 7th, as the market grappled with a resilient dollar and growing apprehensions regarding the Federal Reserve’s (Fed) stance on interest rates. A strengthening dollar, coupled with concerns over the decline in US jobless claims to a seven-month low, has fueled speculations that the Fed might maintain high interest rates for a longer duration than initially anticipated.
The day saw gold futures drop by $1.70, representing a 0.09% decrease, ultimately closing at $1,942.50 per ounce. Simultaneously, silver futures experienced a decline of 26.30 cents, equivalent to 1.12%, concluding at $23.24 per ounce. Platinum futures weren’t spared either, registering a dip of $5.70, equivalent to 0.62%, and closing at $909.60 per ounce. On the contrary, palladium futures demonstrated resilience by rising $4.30, an increase of 0.4%, and closing at $1,215 per ounce.
The US Labor Department reported a significant decline in initial jobless claims, which decreased by 13,000 to 216,000 during the previous week. This marks the lowest level seen in seven months, dating back to February, and is contrary to analysts’ expectations, which had predicted an increase to 234,000.
This favorable labor data prompted a notable shift in investors’ expectations regarding the Federal Reserve’s upcoming actions. Currently, investors assign a 45.3% probability of a 0.25% rate hike during the Fed’s meeting on November 1st, up from the 37.1% probability recorded the previous week and the 28.6% probability from a month ago.
The strengthening dollar has added to the pressure on gold prices. The dollar index, which gauges the dollar’s performance against six major currencies, witnessed a 0.19% overnight increase, reaching 105.0588. This upward trajectory makes gold contracts, which are priced in dollars, less enticing for investors holding alternative currencies.
Looking ahead, investors are eagerly awaiting the release of the Consumer Price Index (CPI) for August in the United States on Wednesday, September 13th. This data will be closely scrutinized to gain insights into the potential direction of interest rates. All eyes will be on the Fed’s Committee meeting on monetary policy scheduled for September 19-20, as market participants seek clarity on the central bank’s future actions and their impact on the gold market.
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Friday, September 8, 2023