Economic data and the U.S. dollar movements will continue to influence the gold market in the coming week. So far, it seems gold price would remain range-bound, but it holds upside potential.
Last Friday, gold prices fell after the U.S. government reported that the economy picked up more jobs than expected in May. This report triggered a strength in the dollar. Usually, the yellow metal and the dollar trade inversely with one another.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were down 2.68% at $1,377.85 a troy ounce in U.S. trading on Friday, up from a session low of $1,377.35 and down from a high of $1,417.45 a troy ounce. On Sunday, in electronic trading gold trades above this level so far.
The Bureau of Labor Statistics reported on Friday that the U.S. economy added 175,000 jobs in May, beating expectations for an increase of 170,000 and up from the 149,000 jobs created in April.
The headline U.S. unemployment rate ticked up to 7.6% last month from 7.5% in April, and even though analysts were expecting the unemployment rate to remain unchanged, markets reacted positively to the new data and took up dollar positions.
The data bolstered the dollar by allaying concerns that the Federal Reserve will keep monetary stimulus programs in place for longer than once anticipated, including its $85 billion bond-buying program that weakens the greenback to spur recovery, making gold an attractive hedge.
The Fed has said it will pay close attention to the labor market when deciding on monetary policy. However, Goldman Sash last week released a note to investors stating it does not expect any actions from the Federal Reserve at least until September.
Market observers and analysts are divided on gold price direction, as global economy demonstrates weak signs of recovery. In addition, physical gold buying remains strong since the beginning of 2013, with Asian individual investors and Central Banks stocking up.
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Elsewhere on the Comex, silver for July delivery was down 4.29% at USD21.733 a troy ounce, while copper for July delivery was down 1.58% and trading at USD3.267 a pound.
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