Gold Posts Best Week Since January
Gold prices surged sharply during Friday's trading (August 7), heading toward their best weekly performance since late January. Spot gold rose approximately 2.4% to US$4,343 per troy ounce, while gold futures strengthened to around US$4,403. Over the course of the week, both have gained more than 7%.
The primary driver was disappointing US Nonfarm Payrolls data. The US economy lost 23,000 jobs in July, a stark contrast to the projected gain of 85,000. Data for May and June were also revised downward by a total of 103,000 jobs, indicating that the labor market is beginning to lose momentum.
This data caused the probability of a Federal Reserve interest rate hike in September to drop to around 44%, down from 55% the previous day. Declining interest rate expectations weighed on the US dollar and bond yields, thereby providing strong support for gold.
Nevertheless, the Fed still faces a dilemma. While the labor market is weakening, inflation risks remain high as oil prices stay sensitive to conflicts in the Middle East. These conditions make the Fed's interest rate policy difficult to predict.
On the geopolitical front, Iran is reportedly nearing an agreement to reopen the Strait of Hormuz. However, reports regarding Iranian attacks and plans to ban US and Israeli vessels keep the market cautious about the risk of energy supply disruptions.
Newsmaker Analysis: Gold's current momentum remains highly bullish due to the combination of weak NFP data and declines in the dollar, yields, and rate-hike expectations. However, following a rally of over 7% in a single week, the risk of profit-taking is rising. As long as Fed sentiment remains dovish, gold has the potential to hold its ground at elevated levels. (arl)
Source: Newsmaker.id
