Gold deposit tops highest for 11 months
Gold prices have held steady above the peak of 1,300 USD/oz last week, which has led Kitco analysts to predict that gold prices will continue to be above the 1,300 USD/oz mark next week.
The three main reasons for the high gold price last week were:
First, political tensions between North Korea and the US have caused investors to turn to gold as a safe haven.
Second, the US economic report is not very optimistic, causing the US dollar to fall miserably. Mr. Colin Cieynski - market strategy director of CMC Markets - predicted that "gold could stabilize in the range of 1,300 USD to 1,330 USD in the near term".
The third reason for the spike in gold prices is that information about the US employment report is lower than expected. In August, the US created only 156,000 new jobs compared to the expected 180,000 jobs. The Department of Labor Statistics also said that the unemployment rate has increased to 4.4%.
As soon as the data was released on Friday, gold prices jumped to an 11-month peak of $1.334/oz and then slowly cooled down. December gold delivery price reached 1.329.40 USD/oz, up 0.54% on Friday.
Will gold prices continue to "sparkle" next week?
After the lower-than-expected jobs report, economists warned that the US Federal Reserve's rate hike plan could be affected by a stagnant 2.5% growth rate for five consecutive months.
The jobs report will weaken the US dollar and be the main reason for golds rally next week, says Jasper Laler, research director at London Capital Group LCG.
Bart Melek, senior leader of TD Securities, also expressed a similar view, saying the Fed does not want to raise interest rates sharply from now until the end of the year.
Another notable piece of information that could affect gold prices is overcoming the consequences of Hurricane Harvey, which could tighten monetary policy this year.
"The devastation and consequences of Hurricane Harvey could push unemployment in Texas and economic indicators lower. At this time, the Fed can still raise interest rates in December, but if we receive bad data, it is likely that the market will reconsider the expectation of increasing interest rates," said Mr. Melek.
