Gold futures settled lower Friday, but still notched a slight gain for the week, after a mostly upbeat U.S. jobs report was seen keeping the Federal Reserve on a path toward gradually higher interest rates.
Beyond the day’s data, the latest lobs in the trade spat between the U.S. and China took effect Friday as expected, casting a somewhat cautious tone across riskier financial markets including U.S. stocks, yet again failing to gin up the typical demand that historically would have flowed into haven gold.
August gold GCQ8, -0.29% fell $3, or 0.2%, to settle at $1,255.80 an ounce. Its finish Thursday at $1,258.80 was the highest settlement since June 26, according to FactSet data. Futures at the start of the week hit their lowest levels of 2018 before climbing modestly over subsequent sessions.
For the week, the gold futures contract gained roughly 0.1%. The most popular fund tracking gold, the SPDR Gold Shares GLD, -0.20% meanwhile, was up about 0.2% this week.
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“Solid jobs report, Fed remains on track, gold sees limited gains,” said Rob Haworth, senior investment strategist with U.S. Bank Wealth Management.
The U.S. created a stronger-than-expected 213,000 new jobs in June. In a surprise, the unemployment rate rose to 4% last month after dropping to an 18-year low of 3.8% in May. Hourly wages rose a modest 5 cents to $26.98. The yearly rate of pay increases was unchanged at 2.7%, a factor that could keep the Fed from feeling it has to speed up pace of rate moves.
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Minutes from the Federal Reserve’s June meeting, released after the Comex settlement Thursday, showed policy makers had no inclination to pause plans for further interest-rate hikes. Higher rates are a gold-negative factor.
“While gold could retrace some of its second-quarter losses, we believe fundamentals, including Fed policy and U.S. dollar trends, remain headwinds,” Haworth said. “Further expansion of tariffs are likely to support the dollar and limit gains for gold.”
Gold and the dollar split from their typical inverse relationship Friday. The ICE U.S. Dollar Index DXY, -0.35% was down 0.5%. A weaker dollar makes assets pegged to the currency, including gold, more attractive to buyers using other monetary units.
Meanwhile, the Trump administration officially imposed tariffs on $34 billion of Chinese imports at midnight Eastern Time, and Beijing reportedly had implemented tariffs on the same value in American goods, as promised.
Concerns about fraying relationships between the U.S. and its longstanding trade partners in the European Union, North American and China, have helped strengthen the dollar and have weighed on commodities priced in the monetary unit, including bullion.
Gold demand also has been hurt by the fear that a trade spat may hurt Beijing’s economy, which already has shown signs of decelerating in recent months. China is one of the world’s biggest buyers in metals, including gold.
Still, “it must be recognised tariffs are a tax on production and consumption. Tariffs will therefore increase price inflation,” said Alasdair Macleod, head of research at Goldmoney.
“It is a common misconception that higher nominal interest rates are bad for the gold price,” he said. “What matters is the inflation outlook and the monetary authorities response to it. If the Fed appears boxed in by rising prices and a softening economy, these will be the ideal conditions for a bull market in gold.”
Around the metals complex, October platinum PLV8, +0.72% added 0.9% to $848.60 an ounce. It still saw a weekly loss of 1.1% after settling Monday at the lowest for a most-active contract since late 2008.
September silver SIU8, -0.26% fell 0.2% to $16.069 an ounce. Silver shed about 0.8% for the week. The most popular exchange-traded fund that tracks silver, the iShares Silver Trust SLV, -0.20% was down 0.4% for the week.
September copper HGU8, -0.34% settled at $2.824 a pound, down less than 0.1%—for a weekly loss of around 4.8%. September palladium PAU8, +0.37% added 0.5% to $947.60 an ounce, ending down nearly 0.4% for the week.