On Friday, gold prices reached new highs as reports of a higher US unemployment rate fueled speculation that the Federal Reserve may soon start reducing interest rates.
As of 2:07 PM ET (1907 GMT), one ounce of spot gold was worth $2,170.55, up 0.5%. At $2,185.50, U.S. gold futures ended the day 0.9% higher than last. It seemed like the next week would see the largest percentage gain for gold since the middle of October.
After data indicated that the US unemployment rate rose and wage rises slowed, even while job growth accelerated in February, gold hit a new record high of $2,185.19.
"We still believe the same underlying premise remains, which is the combination of the expectation that the Fed is still going to cut rates later this year and dollar weakness," stated David Meger, director of metals trading at High Ridge Futures. While the yield on the 10-year U.S. Treasury fell to a more than one-month low, the dollar index (.DXY), opens new tab, was 0.1% lower, causing gold to become cheaper for buyers overseas.
After the jobs report, traders increased their bets that the Fed could begin decreasing interest rates in May to approximately 30%. However, June was still the most likely option, with a 73% chance of occurrence.
Tuesday marked the beginning of gold's record run as the metal eclipsed its December top, with support coming from signs of moderating price pressures and its traditional allure as a safe haven. As the opportunity cost of storing bullion is reduced due to low interest rates, gold prices are supported.
The Federal Reserve will be perceived as staying on track for June based on this jobs report. A metals dealer based in New York, Tai Wong, predicted that gold prices will generally continue to trend higher, though a temporary consolidation might be in order.
According to the London Bullion Market Association (LBMA), the gold price benchmark in London reached a new record high of $2171.30 per troy ounce during an afternoon auction on Friday. Palladium down 1.8% to $1,015.50 per ounce, platinum fell 0.9% to $910.10 per ounce, while spot silver fell 0.3% to $24.25. There was a plan for weekly gains for all three metals.
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