Fundamental Comment

Gold may face further pressure ahead of hectic week

Gold may face further pressure ahead of hectic week

Gold slipped on Friday after the release of upbeat U.S. jobs report that reduced the possibility of an interest rate cut by the Federal Reserve later this month.

The precious metal prices extended its losses for a second straight session on Friday, as it closed at $1399 an ounce after it hit a peak of $1437 an ounce on June 3.

The U.S. Labor Department data showed that the world’s biggest economy added 224,000 jobs in June, exceeding the forecasted reading of 160,000 jobs.  

Despite an expected rise in unemployment rate and lower than forecast rise in wage growth, investors had considered the report positive to the economy.

The stellar non-farm payrolls report lowered the chances of seeing an interest rate cut when Fed policymakers meet on July 31.  

In addition, the US President Donald Trump said he intended to nominate two dovish candidates to the Federal Reserve’s board of governors.

Gold faced some selling pressure last week after the United States and China agreed to restart trade talks, which halted in May, thereby denting the safe haven appeal of the yellow metal.

Top representatives of the United States and China will resume talks next week, White House Economic Adviser Larry Kudlow told reporters last week.

However, investors could give more attention to Fed minutes, as it may reveal how far Fed members were inclined to cutting interest rates, which would give an indication about the probablity of slashing interest rates by the end of the month.

Also, Fed Chairman Jerome Powell is due to testify before the House Financial Services Committee and the Senate Banking Committee.

The dollar index climbed to a two-week high of 97.00 on Friday after the release of the NFP, managing to lock its second cosnecutive weekly gain.

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