Bullion that initially seemed to enter a bullish streak last week has cut back its gains, hurt by strong US economic data. Last week, Gold was able to post slight gains on mixed US jobs data. But, later this week a strong performance from the US manufacturing sector put the bullion on the back foot.

On Wednesday last week, Gold for December delivery dropped by 0.9% to close at $1,313.00 an ounce. This was after it hit a session low of $1306.30 an ounce. On Thursday, Spot gold fell by 0.8% to $1,311.50 an ounce. US Gold Futures for December delivery too dipped by $1.80 to settle down at $1,311.20.

But, on Friday, Bullion posted slight gains, as Spot Gold edged up by 0.1% to $1,309.80 an ounce. While the US Gold Futures for December continued its decline, as it dipped by 70 cents to settle down at $1,310.50 an ounce. Tracking the Spot Gold, other precious metals like Silver, rose by 1.63% to trade at $19.91 per ounce, for the period ending 21:00GMT on Friday.

Last week, the US second quarter annualized GDP showed a 1.7% increase. This beat the market expectations of a mere 1.0% rise in the US GDP, signaling growth in the US economy. The US payrolls data too came out strong with an increase to 200,000, well above the analysts’ expected rise to 180,000. Also, the US jobless claims data fell by 19000 to 326,000 that clearly beat the market expectations. This was its lowest level since early 2008.

Moreover, on Thursday, the ECB reaffirmed that the current interest rates will remain lower with no changes for the near future. Also, the US manufacturing index for July increased to 55.4 from 50.9 in June, beating the expectations of a rise to 52.0.  This saw the US equities rally up to a record high, as the S&P 500 index rose above the 1700 mark for the first time. All these factors brought down the Gold prices for the week.

However, on Friday last weekend, Gold seemed to get a slight reprieve, as it was able to pare back some of its previous losses to post a slight gain. This is was due to a lukewarm non-farm payrolls data that revealed an increase to 162,000, against an expected rise to 185,000. This was a mixed signal for the US labor market that reduced the chances of the Fed scaling back its monetary stimulus by September.

Starting this week, on Monday, the Spot Gold that showed signs of early gain continued its last week downtrend, as it fell by 0.7% to $1,302 an ounce. The US Gold Futures too declined by 0.6% to $1,302.40 an ounce, its lowest in two weeks. In line with this trend, Silver too declined by 0.91% to trade at $19.71 per ounce.

Continuing this decline, on Tuesday, Spot Gold fell by 0.6 %to $1,295.91 an ounce by 0251 GMT. While Gold Futures declined by 0.95 percent to $ 1,290.9. Tracking the Bullion’s slide, Silver dipped by 0.56% to $19.65, whereas, Platinum fell by 0.66% to $ 1,441.60 and Palladium plummeted by 1.07% to trade at $ 727.55.

The US services sector had recorded its fastest growth since February, with the Institute of supply management PMI index rising to 56.0 from 52.2 in June. This beat the markets’ expectations of a rise to 53.1.  The US unemployment rate too declined to 7.4% after a long time.

Meanwhile, the PMI index of the UK and the Euro Zone climbed up after a long time, signaling economic expansion in Europe. The holdings in SPDR, worlds the largest Gold ETF fund, too decline by 0.2%. All these factors weighed down on the Gold prices, as fresh worries of the Fed tapering its monetary stimulus by September cropped up among investors.

Thus, Bullion recorded a weekly loss of 0.9%, as it fell to its two-week low. This was due to strong positive global economic cues that reduced Gold’s appeal as an investment hedge against risks. However, US labor market has been giving out mixed signals and the Dollar is not firmly on an uptrend. So, future lackluster US or Eurozone data would possibly put Bullion back on an uptrend. 

Note: This blog is just an expression of the author’s opinion and cannot be responsible for any losses incurred.