Gold price rebounds from lowest levels since turn of year
The price of gold has rebounded from its lowest level since the start of the year following Friday’s sharp drop. During the previous session, the precious metals tumbled as an upbeat US jobs report strengthened the dollar and raised expectations over a pending hike in US interest rates.
Gold for immediate delivery had gained nearly 0.6 percent, or $6.62, to $1,173.53 per troy ounce as of 08:36 GMT, and was trading around 4.5 percent below its 50-day simple moving average of $1,253.73. During the previous session, the precious metal hit $1,163.71, its lowest since 01 December. Bullion settled nearly four percent down last week, extending February’s 5.1 percent drop.
The Bullion Desk cited a report from Barclays Capital as saying: “Following a number of market moving events, from India’s budget to the ECB’s announcement, gold finished the week plummeting to levels last seen three months ago […] Gold failed to garner traction after India’s budget kept the import duty intact, but the catalyst for the hefty move lower was the stronger-than-expected US nonfarm payroll numbers”.
On Friday, the precious metal tumbled nearly 2.6 percent following the release of the employment situation report for last month from the US Bureau of Labor Statistics. According to the Department of Labor’s statistical arm, nonfarm payrolls rose by 295,000 in February, ahead of the forecasts for 245,000 reported by IG, while the unemployment rate fell from 5.7 percent to 5.5 percent. January payrolls were revised down to show a 239,000 gain, versus an initial 257,000.
On the COMEX in New York, gold for April delivery had gained $3.7 to $1,173.3 an ounce as of 08:43 GMT. Gains in bullion are, however, likely to remain restrained amid a strengthening US dollar. Earlier during today’s session, the DXY dollar index, which pegs the greenback against six of its major peers, hit a fresh 11-year peak of 97.828.
Demand for gold tends to ease with a strengthening of the US dollar as it makes dollar-denominated precious metals more expensive when converted into other currencies. According to FastMarkets analyst William Adams: “The strong dollar and prospects for an earlier interest rate rise are weighing on prices. Although the dollar is strong, it does mean currencies are weak and the prospects of further currency weakness may well become a bullish factor for gold if non-dollar investors look to hedge their currency weakness”.