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What’s happening: Gold prices recorded losses on Friday amid strength in the US dollar.
What happened: The US dollar has been on an upturn after the victory of Donald Trump in the Presidential election.
The US Federal Reserve cutting its benchmark interest rates by 25 basis points (bps) on Thursday also impacted gold prices.
Why it matters: Republican Donald Trump secured a second term as the US President, defeating Democratic candidate Kamala Harris. Trump made a historic electoral comeback last week, securing 295 votes versus 226 for opponent Harris.
The US dollar climbed on speculations of Trump’s policies being pro-business and resulting in stronger economic growth.
On Thursday, the US Federal Reserve cut its interest rates by 25bps. However, policymakers said they would follow a cautious approach to another rate cut in the near term. Trump’s win in the election raised speculations of the US central bank slowing its pace of rate cuts due to the new President’s tariff policy.
Nonetheless, last week’s rate cut supported gold. Lower interest rates increase the demand for the non-yielding yellow metal.
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, rose around 0.4% to 104.95 on Friday. The DXY also notched gains for the week.
US gold futures declined 0.4% to settle at $2,694.80 an ounce on Friday.
In other metals trading, silver prices fell to $31.449 an ounce, while platinum prices dipped to $978.50 and palladium settled lower at $992.20.
What to watch: Investors await the release of inflation data from the US this week, which is expected to significantly impact gold prices ahead. This is because the yellow metal is widely considered as a hedge against inflation.
The annual inflation rate in the US, which eased for a sixth straight month to 2.4% in September, is expected to rise to 2.6% in October. Analysts expect the consumer price index to rise by 0.2% month-over-month in October, the same pace as in September. Factory gate prices, which came in unchanged in September, are expected to increase by 0.2% month-over-month in October.
Context: The CAD/USD forex pair fell on Friday amid a decline in crude oil prices and strength in the US dollar.
Details: Data released on Friday showed employment in Canada rising by merely 14,500 in October, compared to a gain of 46,700 in the previous month. The figure also came significantly below market estimates of 25,000 job adds.
Canada’s unemployment rate came in unchanged at 6.5% in October, compared to market expectations of 6.6%.
The Bank of Canada has cut its benchmark interest rate by 125 bps since June this year, including the recently announced rate cut of 50 bps. The latest jobs report showing softness in the labour market lowered speculations of the BoC cutting interest rates by 50 bps at its next meeting on December 11.
Weakness in price of crude oil, one of Canada’s major exports, also weighed on the loonie. WTI crude oil prices dipped more than 2.7% to settle at $70.38 a barrel on Friday.
The greenback moved higher amid prospects of increased tariffs and expansionary fiscal policies by US President Donald Trump. Strength in the US dollar exerted pressure on the CAD/USD forex pair.
The CAD/USD forex pair fell around 0.4% to 1.3915 on Friday. The S&P/TSX Composite Index declined by 0.35% to close at 24,759.40.
What to watch: With no major economic releases from Canada scheduled for today, investors await the release of data on building permits on Tuesday. The total value of building permits, which fell by 7% to $11.5 billion in August, is expected to decline by 1.1% in September.
Other Markets: European indices closed lower on Friday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.84%, 0.76% ,1.17% and 0.65%, respectively.
US President-elect Donald Trump urged Russia’s President Vladimir Putin not to escalate the war in Ukraine. The news sent the RUB/USD slightly higher in forex trading this morning.
Ireland’s BNP Paribas Real Estate Construction PMI rose to 49.4 in October, from a three-month low of 49.0 in September, lending support to the EUR/USD forex pair.
Japan’s current account surplus shrank to ¥1,717.1 billion in September, from ¥2,954.2 billion in the year-ago month. The latest reading missing market expectations of a surplus of ¥3,273 billion sent the JPY/USD pair lower in forex trading this morning.
Saudi Arabia’s industrial production declined by 0.3% year-over-year in September, compared to a revised 2.9% gain in August. The region recording its first decline in industrial output since June exerted pressure on the SAR/USD forex pair.
China’s annual inflation rate came in at 0.3% in October, down from September’s reading of 0.4%, which sent the CNY/USD pair higher in forex trading this morning.
Turkey’s industrial production, jobless rate, labour activity rate, total vehicle sales and car production, Brazil’s government debt to GDP, government budget value and Central Bank of Brazil’s focus market readout, Mexico’s consumer confidence indicator and industrial production, Russia’s balance of trade, as well as Indonesia’s total car sales.
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