BY ONOME AMUGE
Gold futures dived into bearish terrain at the close of the week’s trading as the combination of a firmer dollar, rise in the U.S Treasury yields resisted bullish hopes for the metal, amid a 3.6 percent drop in the U.S unemployment rate which reduced investor’s appetite for gold.
The front-month gold futures contract on New York’s Comex dipped $30.10, or 1.5 percent, at $1,919.20 an ounce. For the week, it dropped 1.8 percent to record its second biggest weekly loss.
Craig Erlam, senior market analyst, UK & EMEA, OANDA, in a note to Business A.M, remarked that the dollar’s rise and the jobs report weighed a little on gold. However, he noted that this doesn’t really change much for the yellow metal as concerned, as it remains range-bound, comfortably above $1,900 and seemingly “going nowhere fast”.
Colin Cieszynski, chief market strategist at SIA Wealth Management, opined that a decline in commodity prices inflicted a bigger dent on the precious metals valuation, particularly with U.S benchmark oil prices tumbling below $100 a barrel to its lowest in about two years.
He observed that the fall in the energy prices is bad news for gold as a surge in energy prices earlier in the year had given the precious metal a tailwind, considering its position as a hedge against inflation.
On his part, Adrian Day, president of Adrian Day Asset Management, said he is bearish on gold for the short term, noting that its safe-haven premium is gradually fading out of the marketplace. However, he added that the decline should be limited and could possibly resume its uptrend now that the current price is not very far from its pre-war trend.