Can Gold Bounce Back?
Gold prices have fallen for eight straight sessions, as a U.S. Federal Reserve interest rate hike seems likely and U.S. private-sector job numbers show strong growth.
The 298,000 private-sector jobs created in February, along with Fed Chair Janet Yellen hinting that an interest rate hike is likely in the near future, have sent gold values slumping, hitting $1,203 per ounce. This is the lowest price since the beginning of February, and it represents a continued slump for the precious metal. (Source: “Gold prices log 7th straight loss,” MarketWatch, March 8, 2017.)
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The payroll processing company Automatic Data Processing (NASDAQ:ADP), more commonly known as ADP, registered high job creation numbers in the United States. According to ADP, this represents the highest public sector job growth since April 2014. Analysts expect the employment data to influence the U.S. Department of Labor’s monthly jobs report, which is set for release this Friday (March 10).
If that too comes back as strong, then expect the price of gold to continue its slump. Conversely, if either the official U.S. Department of Labor numbers don’t match up with the ADP report, or if the European Central Bank meeting on Thursday has any surprises, then gold might be able to make some gains on the back of potential discrepancies or surprises.
With the Fed set to raise interest rates as early as its next meeting from March 14–15, gold prices may be in for a tough month.
The decline in crude oil prices is also a determining factor in gold prices, some analysts believe.
Gold may, however, benefit as Bitcoin prices also hit a slump this week, dropping to near-parity with gold per ounce after the online currency recently surpassed the yellow precious metal for the first time in its history.
While Bitcoin still remains higher-priced than gold, the sinking value of Bitcoin over the past few days could help restore confidence in gold as the risk-management asset of choice among investors.
