- Gold Drops Back Below $1900
- Fed Tapering Concern on Improved Data
- Broader Commodities Market Also Lower
In commodities news this week, the price of gold has taken a tumble heading into the weekend. The safe-haven precious metal had been trading steadily through the early part of the week but has lost ground on strong US economic data. This pushed prices of both gold and other commodities lower yesterday as trader concern grows over how the Fed may handle any economic overheating. Tapering has been rumored throughout the week and has clearly injected some fear into the market. Key data will come later today when the US releases non-farm payroll numbers.
Gold Back Below Key Level Following Sell-Off
Gold had traded well coming into the week and is still in a balanced position on a week over week basis, but it has lost the sine it had in the earlier part of the week when trading above $1900 with new highs in view. Instead, the price has moved back below the $1860 mark at certain times. This represents routine profit taking to some analysts who see the positives in the return to strength of the Dollar.
The largest period of selling came after the latest ADP private payroll numbers were released yesterday. These showed a huge jump in hiring across the past month with 978,000 new jobs created. This number eclipsed the expectation that had been set at 645,000 and helped buoy the USD forex market but did hit commodities.
Fed Tapering Next Major Concern
These ADP numbers are reflective of an economy that is recovering quickly and with strength. The positive impact of this is felt through the number of people who are getting back to work. What has concerned the gold market and others is not a strong recovery, but how the Federal Reserve may act to prevent any further inflationary pressures on the economy. The widespread expectation is that they will start tapering in addition to other measures.
Such measures have already been hinted at or suggested by some states though these are yet to be taken up by Fed Chief Jerome Powell even as key inflation tracking data shows the economy is getting very close to a situation where there could be concerns.
Other Commodities Lower With NFP Data Awaited
As well as a 2% dip in gold prices, both silver and copper witnessed some selling moving into Friday on the back of many similar concerns. While copper markets shed as much as 4%, silver which had been trading steadily higher, saw profit-taking and a decline below the $28 mark.
The next key data that will determine how the week ends for gold, and other commodities, is the release of NFP numbers today. Economists polled expect the numbers to show that around 671,000 jobs were added in May. This would be way above the miss of the previous month, but could well force the conversation on tapering to get louder.