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Gold closed the week near US$4,140 an ounce, down about 3% and its largest weekly fall since June. It followed a September in which the metal lost more than 6%, after the US Federal Reserve raised rates for the first time in three years.
The pressure came from a firm US dollar, elevated Treasury yields and oil prices kept high by Middle East tensions. Energy-driven inflation keeps the Fed leaning towards further hikes, and higher rates raise the cost of holding gold, which pays no interest.
Friday brought some relief. US employers added only 29,000 jobs in September against forecasts of 90,000, unemployment rose to 4.2% and earlier months were revised down. Markets cut the odds of an October rate hike from around 70% to about 20%, and gold briefly traded above US$4,220 before giving back the gain.
Sentiment has cooled. Kitco's weekly survey showed Wall Street analysts on the edge of a bearish majority, while retail investors abandoned the bullish lean they had held since late July. ANZ noted that weaker jobs data offers some support, but high bond yields and energy inflation risks continue to cap the upside.
The week ahead: minutes from the Fed's September meeting will be studied for clues on how many more hikes policymakers have in mind.
Sources: Kitco · Bloomberg via Yahoo Finance · Investing.com · KuCoin News