The gold price surged by almost $40 or over 3% on Friday, at its peak and is trading only slightly weaker at around $1,135 per troy ounce as the new week gets underway.
Spot gold ticked up 0.2% to US$1,138.11 an ounce by 1156 GMT.
It is still largely holding on to Friday’s 2.2 percent jump, the biggest one-day rise since January 15 following data that showed U.S. employers slammed the brakes on hiring over the last two months.
The USA dollar DXY, -0.03% has likely “priced in interest-rate liftoff and an aggressive rate-hike program for several months now”, Colin Cieszynski, chief market strategist at CMC Markets told MarketWatch.
“The Fed’s credibility is at stake if it fails to move on interest rates this year“, says Mitsubishi Corp’s precious metals analyst Jonathan Butler, noting that the United States central bank has “spent the past two years preparing the markets”.
Higher rates would increase the opportunity cost of holding gold.
“However, other indicators, such as auto sales were strong, and we need more evidence on that one before we can come to a conclusion and gold’s support could be short lived”.
After Friday’s soft jobs report, data on Monday showed the pace of growth in the US services sector decelerated in September, as new orders and business activity slowed. The metal is up 8.2 percent since Thursday, the biggest such increase since March 20. Prices had risen to $1,141.80 in the previous session, the highest since September 28, before closing down 0.2%. On Monday, the metal rose to its highest in two weeks at $15.35 an ounce, before trading up 0.5 percent at $15.32.
Expectations of lower demand after revelations last month that Volkswagen falsified US vehicle emission tests, which a few believe could affect demand for diesel cars, hit platinum prices. Platinum is widely used in auto catalysts, particularly for diesel engines.
“Silver has its precious-metals hat and industrial hat on, and both of those are in agreement”, McGhee said.