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What’s happening: Gold prices settled lower on Friday as investors assessed the latest nonfarm payrolls (NFP) report from the US.
What happened: The yellow metal retreated from near-record highs after a mixed jobs report raised doubts around the extent of rate cuts by the US Federal Reserve.
Some strength in the US dollar also weighed on gold prices on Friday’s session.
Why it matters: Data from the Labor Department released on Friday showed nonfarm payrolls rose by 142,000 in August. Although the figure was higher than July’s lows of 89,000, it missed market expectations of 160,000 job adds.
The country’s unemployment remained at 4.2% in August, in-line with market estimates and down from 4.3% in the previous month. Average hourly earnings for employees on private nonfarm payrolls rose by 0.4% to $35.21 in August, compared to a 0.2% rise in the prior month and higher than expectations of 0.3%.
Markets are pricing in a rate cut by the Fed this month. The latest NFP report raised speculations of policymakers cutting rates by 25 basis points (bps), rather than by 50bps, on September 18.
Strength in the US dollar also weighed on gold prices, as a higher greenback makes metals more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.1% to 101.19 on Friday.
US gold futures fell 0.7% to close at $2,524.60 an ounce on Friday.
In other metals trading, silver fell more than 3% to settle at $28.183 an ounce. Platinum slipped to $918.7, while palladium closed lower at $898.50.
What to watch: Investors will continue monitoring comments from Fed officials regarding their monetary policy. Data on wholesale inventories and consumer inflation expectations from the US will also remain in focus today.
US consumer inflation expectations for the year ahead are likely to remain unchanged at 3% in August. Analysts expect US wholesale inventories to grow by 0.3% to $905 billion in July, versus a 0.2% gain in the earlier month.
Context: London’s equity markets settled lower on Friday, amid a decline in personal goods and automobile stocks.
Details: Investors monitored mixed jobs data from the US, raising doubts on the scale of rate cuts from the Federal Reserve this month.
The Halifax House Price Index in the UK rose 4.3% year-over-year in August, notching the biggest gain since November. This was also much higher than the 2.4% increase in July.
The blue-chip FTSE 100 declined by 0.73% to close at 8,181.47 on Friday, falling for the sixth consecutive session. The index lost 2.5% last week to record its steepest weekly decline since mid-January.
The personal goods stocks were among the worst performers, shedding around 3.7%, after shares of luxury retailer Burberry tumbled more than 5% on Friday. The personal goods index lost 8.2% last week.
However, the weekly decline in London’s equity index was less than its European and US peers, as the STOXX Europe 600 Index fell 3.6% and the S&P 500 shed more than 4% last week.
The domestically focused FTSE 250 fell 1.29% to close at 20,494.00 on Friday, recording its biggest decline in six weeks.
What to watch: With no major economic data from the UK today, investors await the release of jobs report on Tuesday. The UK’s unemployment rate, which declined to 4.2% in the April to June period, is expected to decline further to 4.1% in July.
The number of people employed in the UK, which rose by 97,000 in the three months to June, is projected to increase by 30,000 in July. Analysts expect the number of people claiming unemployment benefits to rise by 21,000 in August, compared to 135,000 in July.
Other Markets: US trading indices closed lower on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 1.01%, 1.73% and 2.69%, respectively.
Ukraine’s President Volodymyr Zelenskyy urged its allies to relax the terms on the use of weapons inside Russia. The news sent the RUB/USD pair lower in forex trading this morning.
Sri Lanka’s number of foreign tourist arrivals rose by 20.7% year-over-year to 164,609 in August. This marked an easing from the 31.3% surge in the prior month and exerted pressure on the LKR/USD forex pair.
China’s annual inflation rate accelerated to 0.6% in August, from 0.5% in the prior month, sending the CNY/USD pair lower in forex trading this morning.
Japan’s economy grew by 2.9% on an annualised basis in the second quarter. The coming in short of market expectations of 3.2% exerted pressure on the JPY/USD forex pair.
Saudi Arabia’s GDP shrank by 0.3% year-over-year in the second quarter. The decline being better than the 1.7% contraction recorded in the first quarter sent the SAR/USD pair slightly higher in forex trading this morning.
Singapore’s foreign exchange reserves, Mexico’s consumer confidence and inflation rate, Central Bank of Brazil’s focus market readout, US Manheim used vehicle value index, total vehicle sales and consumer credit, as well as Argentina’s industrial production.
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