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Gold futures headed higher on Monday, after bullion notched the steepest weekly gain since mid November, following a stronger-than-expected monthly rise in U.S. nonfarm payrolls.
“Gold has started the week on the front foot by making fresh gains after climbing above and successfully holding above the psychologically important threshold of $1,800 an ounce,” wrote Rupert Rowling, market analyst at Kinesis Money, in a Monday research note.
April gold
GCJ22,
GC00,
rose $8, or 0.4%, to trade at $1,815.80 an ounce, Prices saw a gain of 1.2% last week, which was the sharpest such advance for a most-active contract since a 2.9% rise in the week ended Nov. 12.
Prices for the precious metal have climbed despite better-than-expected monthly data on U.S. employment.
Data on Friday showed the U.S. added 467,000 jobs in January, with economists polled by The Wall Street Journal forecasting 150,000 new jobs and some predicting job losses on the month due to the impact of omicron, the variant of the coronavirus that causes COVID-19.
Unfortunately for the bull camp on gold, “surging jobs figures from the U.S. were seen as a development capable of shifting the U.S. [Federal Reserve] into action next month instead of the trade increasing the probability of inflationary price action,” analysts at Zaner wrote a Monday note.
The positive results may support a faster pace of interest-rate increases by the Fed, with the market pricing in as many as four rate increases this year to benchmark federal funds rates, which currently stand at a range between 0% and 0.25%.
Gold’s medium-term direction will be governed by how quickly the Fed “decides to implement the more hawkish strategy officials spoke more explicitly about last week,” Rowling wrote.
Any increases will likely strengthen the U.S. dollar and place dollar-priced gold under pressure.
The dollar
DXY,
was flat at around 95.47, while the 10-year Treasury note yield
TMUBMUSD10Y,
was edging up at 1.93%. A stronger dollar can undercut appetite for buck-priced bullion among overseas buyers while rising yields can lift the opportunity costs of owning nonyielding assets over government debt.
Concerns about pricing pressures will add to interest in a report on consumer prices due Thursday, the consumer-price index.
Meanwhile, March silver
SIH22,
was trading 42 cents, or 1.9%, higher at $22.895 an ounce, after gold’s sister metal put in a 0.8% weekly advance on Friday.
March copper
HGH22,
lost nearly 0.7% to $4.459 a pound. April platinum
PLJ22,
shed 0.6% to $1,018.20 an ounce and March palladium
PAH22,
traded at $2,234 an ounce, down 2.5%.
