Gold slipped on Friday as a resumed Treasury bond sell-off offset a drop in Federal Reserve rate-hike bets triggered by a weak jobs report. Bullion is on track for its fifth negative week in six, pressured by a stronger dollar and rising long-end yields. Oil is also set for a weekly loss even as G7 nations agreed to release emergency crude stocks.
Spot gold fell 0.8% to $4,145.78 an ounce at 16:00 ET on Friday, while gold futures added 0.3% to $4,174.59 an ounce. A resumed Treasury bond rout offset a drop in Fed hike bets, leaving the metal on track for a weekly loss.
For the week, spot gold had dipped 3.3% and futures had shed 3.4%, weighed down by the bond-market sell-off and a surging dollar.
Soft jobs data pulls rate-hike odds lower
The U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose 29,000 last month, well below the 89,000 estimate and the slowest monthly growth of the year. July and August payrolls were also revised down by a combined 60,000, and the unemployment rate ticked up to 4.2% from 4.1%.
As a result, odds of a quarter-point interest rate hike this month fell to about 23%, while odds of a hold rose to roughly 77%, according to the CME FedWatch tool. The Fed's preferred inflation gauge had already come in softer than expected earlier in the week, though its headline reading of 3.4% remained well above the Fed's 2% target.
Chris Osmond, chief investment officer at Fifth Third Wealth Advisors, said: "A 29,000 print, missing all estimates, materially changes that calculus." He added that the Fed's dual mandate is now pulling in opposite directions, with inflation still sticky even as the labor market deteriorates faster than expected. Traders now await September CPI and PPI data, with the Fed's next policy decision due October 28.
Bond sell-off resumes, dollar surges
A Treasury sell-off paused briefly after the jobs report but resumed later in the day. The 2-year yield has fallen 2.9 basis points this week, while the 10-year climbed 10.3 basis points and the 30-year rose 12.9 basis points. Both longer-dated yields touched their highest levels since April 1, 2002, and May 20, 2002, respectively, on Thursday.
The bond sell-off has been one of the main drivers of the dollar's advance this week, which in turn has dragged gold lower. Lower rate environments typically strengthen non-yielding assets like gold and weaken the dollar.
Oil heads for a weekly loss
Oil prices ticked up Friday, though Brent crude futures fell 1.5% on the week, a decline that has come amid improving Middle East crude flows offsetting a lack of diplomatic breakthrough between the U.S. and Iran. Earlier in the day, oil had fallen after G7 countries agreed to release up to 100 million barrels of emergency stocks to help bring down global prices, particularly for diesel.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
