Gold Silver Reports — Gold Investors Asking What’s After March Hike — Gold futures posted the longest slump since mid-2015 as momentum in the U.S. labor market bolsters the prospect of multiple U.S. interest-rate increases this year.
U.S. employers added jobs at an above-average pace for a second month in February on outsized gains in construction and manufacturing while wage growth picked up, a government report showed Friday. Gold futures had a ninth straight decline, the longest stretch since July 2015, and a second straight weekly loss.
Precious metals have been hammered by Federal Reserve officials including Chair Janet Yellen talking up the prospect of higher rates when they gather next week. Higher rates reduce the appeal of owning gold because it doesn’t pay interest. The European Central Bank, meanwhile, has signaled it won’t add to stimulus as growth picks up.
“All eyes will be on the Fed,” said Phil Streible, a senior market strategist at RJO Futures in Chicago. “If they give any indication they may want to be more aggressive, gold prices will remain under pressure.”
Gold futures for April delivery slipped 0.1 percent to settle at $1,201.40 an ounce at 1:42 p.m. on the Comex in New York. Prices are down 2 percent this week.
Friday’s jobs report is the last major piece of economic data before the Fed meets next week, with markets pricing a rate increase as a near certainty. While hiring was robust and wage gains strong, analysts are looking for clues on whether the pace is fast enough to spur the central bank to accelerate its timeline for future rate hikes from the current forecast of three.
“The immediate question now is the climate we may face after the rate hike comes to pass,” Barnabas Gan, an economist at Singapore-based Oversea-Chinese Banking Corp., wrote in a note dated March 10. While market watchers will be left wondering when the next rate hike is coming, uncertainty over European elections and a lack of clarity over Trump’s policies, may mean the fall in gold is short lived, he said.