Commodity Market: Gold heads for first weekly loss in seven after central bank hike moves, US Non-Farm Payrolls data in focus

Spot Gold was mostly steady on Friday, after retreating almost 2% in the prior trading day, as market players were mulling interest rate hike moves by major central banks.

Yet, the precious metal looked set to register its first weekly decline in seven weeks, as the US Dollar remained firm.

“With gold prices delivering a stellar performance of more than 20% over the past three months, some positioning for softer rate-hike bets could already have been at play and having found the much-needed validation from the recent FOMC meeting,” Yeap Jun Rong, market analyst at IG, was quoted as saying by Reuters.

There could be some profit taking in the near term, but “for gold prices, a greater conviction for sellers could be a break below the $1,895 level, where dip-buyers were seen stepping in this week just before the meeting,” IG’s Yeap Jun Rong said.

Earlier this week, the Federal Reserve delivered a smaller, 25 basis point, rate hike, in line with expectations, but still, borrowing costs were taken to 4.75% – a level not seen since 2007.

At the press conference following the FOMC decision, Fed Chair Jerome Powell noted that the disinflation process was on an early stage and interest rates were not yet at a sufficiently restrictive level.

A day later, the European Central Bank raised the interest rate on the main refinancing operations by 50 basis points to 3.0%, the highest level since late 2008, and vowed to deliver another 50 basis point hike in March. The ECB has said it will continue raising rates significantly at a steady pace to ensure a timely return of inflation to the bank’s 2% target.

The Bank of England also raised interest rates by 50 basis points to 4.0% at its policy meeting on February 2nd, while delivering a 10th hike in a row that brought borrowing costs to their highest level since late 2008.

Investors will now be paying attention to the US Non-Farm Payrolls data due out at 13:30 GMT today. Employers in all sectors of the US economy, excluding farming, probably added 185,000 job positions in January, according to market consensus, following a job growth of 223,000 in December.

As of 9:28 GMT on Friday Spot Gold was edging up 0.10% to trade at $1,914.53 per troy ounce. Yesterday the precious metal went up as high as $1,959.77 per troy ounce, which has been its strongest price level since April 19th 2022 ($1,982.04 per troy ounce).

Gold has retreated 0.65% so far this week, following a 0.09% gain in the previous week.

Gold Futures for delivery in April were edging down 0.16% on the day to trade at $1,927.65 per troy ounce, while Silver Futures for delivery in March were down 0.28% to trade at $23.550 per troy ounce.

The US Dollar Index, which reflects the relative strength of the greenback against a basket of six other major currencies, was inching down 0.09% to 101.650 on Friday.