Gold prices are on a downward trend this week, after the mixed US jobs report did not create more momentum for the Fed to consider cutting interest rates.
At the end of the weekend session, gold prices retreated to around 4,065 USD/ounce, down about 0.5% compared to last week. This is the final labor report that the FED will consider before the meeting on December 9-10, showing that the US job market grew more than expected in September, but the unemployment rate is still rising.
According to TD Securities experts, including Oscar Munoz, the report brings arguments to both sides, as those who favor high interest rates and those who seek easing can consolidate their views.
Minutes from the Federal Open Market Committee's (FOMC) October meeting, released on Wednesday, showed many Fed officials preferring to keep interest rates unchanged. In the interest rate swap market, the probability of the FED cutting interest rates next month is only 40%, much lower than the bet level of 0.25 percentage points down two weeks ago. In an environment of high interest rates, gold is often less attractive.
Despite falling off a historical peak set last month, gold prices have risen about 55% since the start of the year, heading for the year with the strongest increase since 1979. This increase is supported by capital flows into ETFs and large central bank purchases. However, analysts believe that the recent increase has been somewhat excessive, mainly driven by the "debasement trade" trend - the shift away from government bonds and major currencies.
The most recent debasement trade was based more on expectations than on reality, said Carsten Menke, head of new-generation research at Julius Baer Group Ltd. He said that although this trend is still a long-term driver due to concerns about escalating tai chinh in the G7 countries, the gold market needs healthy corrections and accumulation.
At 9:31 a.m. in Singapore, gold prices fell slightly by 0.3% to $4,063.37/ounce. Bloomberg Dollar spot is almost flat. Silver decreased, while palladium and platinum increased.
