Fundamental Comment

Gold retreats from two-week high, looks for support from NFP

Gold retreats from two-week high, looks for support from NFP

Gold retreated from a two-week high on Friday, but the U.S. non-farm payrolls report may trigger more safety demand on the yellow metal, given the undergoing uncertainties surrounding global economies.

The precious metal traded lower at $1437.20 an ounce, sliding from a top at $1449.10, the highest level since July 19.

Gold prices soared sharply on Thursday after U.S. President Donald Trump threatened to slap a 10 percent tariff on the $300 billion worth of remaining Chinese goods, thereby reigniting the trade war between the U.S. and China.

With other mounting uncertainties surrounding the global economy, most notably the world economy slowdown and Brexit, gold may gain further haven demand.

China’s Shanghai Composite Index led losses among Asian shares on Friday as it slipped 1.4 percent to 2,867.84, trailing overnight losses on Wall Street.

Later in the day, eyes will focus on the U.S. non-farm payrolls report for the month of July as it will reflect the health of the labor market in the U.S. after the Fed’s rate cut decision on Wednesday.

After a robust job creation pace in June of 264,000, the world’s biggest economy probably created 164,000 jobs in July, according to median forecasts for the NFP.

A lower than forecast reading would support the Fed’s decision and signal the move was needed to support the economy and may followed by other monetary easing measures.

As known, gold mainly takes advantage of lower interest rates, especially in the United States, since it provides no interest to bullion holders.

The U.S. dollar index fell for a second straight session to 98, resuming its plunge from a more than two-year high hit the previous session.

Gold could continue its rally after generating gains over the previous three months, where it succeeded to build strong support at $1400 an ounce.

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