Gold price finishes higher, but suffers for 4th straight weekly loss

October 7, 2017

New York (Oct 7)  Gold prices ended higher Friday, reversing from earlier gains as investors offered a mixed reaction to monthly U.S. jobs data and looked to comments from Federal Reserve officials for clues on the central bank’s plan for interest rates.

The jobs report, which included a mixed bag of revisions to recent months’ data and signs of rising wages, wasn’t seen derailing the Federal Reserve from a gold-negative interest-rate hike later this year, but Dallas Fed President Robert Kaplan said Friday that he remains undecided over whether to support a rate increase in December.

December gold GCZ7, +0.45% tacked on $1.70, or 0.1%, to settle at $1,274.90 an ounce, with prices logging a weekly fall of about 0.8% after posting declines in each of the last three weeks. The exchange-traded SPDR Gold Shares GLD, +0.47%  rose 0.4%, but traded down 0.5% for the week.

December silver SIZ7, +1.27% meanwhile, tacked on 15.2 cents, or 0.9%, to $16.790 an ounce for a weekly climb of roughly 0.7%. The silver ETF iShares Silver Trust SLV, +1.02% was up 0.8% in Friday dealings.

Components of the September jobs report, including the unemployment rate and wages, “were all ‘hot’,” said Tyler Richey, co-editor of the Sevens Report. “But those inflationary (and ultimately hawkish) numbers were all likely the result of Hurricane Harvey skewing the data,” he said, and the gold market cut its earlier losses.

“It feels like investors are worried that there will be a sharp correction in the data in the next jobs report and that speculation is dovish for markets,” said Richey.

The U.S. economy shed 33,000 jobs in September, marking the first decline since 2010, as hiring and employment in September were stunted by hurricanes Harvey and Irma. The unemployment rate, meanwhile, fell to 4.2% from 4.4% and hit the lowest level since December 2000. The jobless rate wasn’t affected by the storms, the government said. Wages rose 0.5%, or 12 cents, to $26.55 an hour, likely reflecting a hurricane-induced bump.

Most Fed members have penciled in a rate increase in December, but in a CNBC appearance after the jobs report, Fed policy voter Robert Kaplan said he’s still undecided about a December move.

Gold traders have been on the defensive as the dollar hit “its highest level on a trade-weighted basis since mid-August. This development has been driven by the very robust U.S. economic data released in recent days, which have caused the Fed rate increase expectations to pick up,” said Carsten Fritsch and the commodities analysts at Commerzbank in a commentary.

The dollar, as gauged by the ICE U.S. Dollar Index DXY, -0.13% which measures the greenback against a basket of six rivals, was down 0.2% Friday, trading up 0.8% on the week. A stronger dollar makes gold more expensive to buyers using other monetary units, and richer yields undercut the appeal of owning gold and other metals, which don’t bear a yield.

On Comex, December copper HGZ7, -0.72%  slipped 1.8 cents, or 0.6%, to $3.029 a pound, still up around 2.4% for the week. January platinum PLF8, +0.03%  fell $1.30, or 0.1% to $916.70 an ounce, but up 0.1% for the week, and December palladium PAZ7, -1.61%  shed $17.50, or 1.9%, to $919 an ounce, ending down 1.9% from a week ago.


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