A robust U.S. jobs report that highlighted the positive effects of Federal Reserve stimulus on markets and the economy led to gold’s worst day and week in almost two months.
The dollar index, denoted by the symbol DXY, gained 0.6% at 92.78 index points on Friday. The index hit a near two-week high at 92.85 earlier in the week, after falling to a one-month low of 91.82.
Comex’s gold futures for the front-month settled at $1,763.10 an ounce, a decrease of $43.40, or 2.5%. It fell 3% during the week.
The yellow metal has been a hedge against economic and political troubles as well as inflation, with Fed Chair, Jerome Powell saying the Fed was still focused on supporting the nation as it recovers from COVID-19.
In addition, Powell did not mention when the Fed might begin to rein in its monthly investments in Treasury bonds and agency mortgage-backed securities, a sum total of $120 billion.
He explained that the Fed should achieve both of its objectives of job creation and sustainable inflation.
After the U.S. economy begins to slow down, however, the Fed’s low rates and indefinite stimulus might have to be reconsidered anew. As of last Friday, the July jobs report showed there were 943,000 new jobs, bringing the unemployment rate down to 5.4%. As reported by a number of economic experts, only 870,000 jobs were expected to be added for July, and the unemployment rate was projected at 5.7%.
The gold market has been in a rut since January last year – when it fell off the cliff in August last year.
The price of the Covid-19 vaccine sailed to record highs and then fell into a seemingly irreversible decline after the first breakthroughs in its efficacy were announced in November.