Gold prices fell on Friday as a solid U.S. employment report for July revived expectations for another interest rate increase by the Federal Reserve this year.
Gold for August delivery settled at $1,258.28 on the Comex division of the New York Mercantile Exchange. The precious metal ended the week down 0.8%, its first weekly percentage decline in four weeks.
The Labor Department reported Friday that the U.S. economy added 209,000 jobs last month, beating expectations for a gain of 183,000 and the unemployment rate ticked down to 4.3%.
The report also showed that average hourly earnings increased by 9 cents or 0.3% last month to $26.36 an hour, the largest monthly increase since October.
Wages increased by 2.5% on a year-over-year basis, matching June’s increase.
The uptick in wage growth indicated that inflationary pressures are firming. Markets believe stronger inflation will enable the Fed to stick to its plans for a third interest rate hike this year.
Expectations of a faster pace of rate increases tend to weigh on gold, which is denominated in dollars and struggles to compete with yield-bearing assets when borrowing costs rise.
Gold prices are up around 9% this year, lifted in part by expectations that the Fed will take a gradual path toward tightening monetary policy.
Elsewhere in precious metals trading, silver was down 2.25% to $16.25 a troy ounce, and ended the week down 2.65%.
In the week ahead, investors will be looking ahead to Friday’s U.S. inflation figures to gauge whether the economy is strong enough for the Fed to stick to its planned tightening path.
Appearances by a number of Fed speakers will also be in the spotlight.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 7
New Zealand is to release data on inflation expectations.
Switzerland is to publish inflation data.
The UK is to produce an industry report on house price inflation.
Financial markets in Canada are to remain closed for a holiday.
Minneapolis Fed President Neel Kashkari and New York Fed President William Dudley are both due to speak.
Tuesday, August 8
Australia is to release a report on business confidence.
China is to publish its latest trade figures.
Wednesday, August 9
China is to release inflation data.
Canada is to report on building permits.
The U.S. is to report on nonfarm productivity and labor costs.
Thursday, August 10
The Reserve Bank of New Zealand is to announce its benchmark interest rate and publish a rate statement which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.
The UK is to report on manufacturing production and trade.
Canada is to publish data on new house price inflation.
The U.S. is to release reports on initial jobless claims and producer prices.
New York Fed President William Dudley is speak about wage inequality in his region.
Friday, August 11
Financial markets in Japan are to remain closed for a holiday.
Dallas Fed President Rob Kaplan and Minneapolis Fed chief Neel Kashkari are to speak and the U.S. is to round up the week with what will be closely watched data on consumer price inflation.