Investing.com – A stronger U.S. dollar and rising U.S. government bond yields could represent a significant headwind for gold this week despite Friday’s gains, as the precious metal’s inverse relationship to the greenback continues to offset safe haven demand.
With a fairly light week on the economic calendar investors will continue to monitor the effects of rising U.S. government bond yields on markets, when U.S. bond markets reopen on Tuesday after Monday’s Columbus Day holiday.
Concerns over Italy’s rising debts and strains in emerging markets will also remain in focus as markets continue to digest Friday’s mixed U.S. non-farm payrolls report.
ended higher on Friday, snapping two days of losses as the dollar softened after the Labor Department reported that the in September, while wage growth also eased.
Gold futures for December delivery ended up 0.42% at $1,206.70 on the Comex division of the New York Mercantile Exchange. The precious metal was up 0.81% for the week.
The U.S. economy added 134,000 jobs last month, the fewest in a year, though the figure for August was revised up to 270,000 from 201,000. The slowdown in jobs growth was likely due to the effects of Hurricane Florence.
Annual earnings growth came in at 2.8%, down from 2.9% in August.
While jobs growth slowed, the unemployment rate fell to a near 49-year low of 3.7%, down from 3.9% in August.
The dollar slipped lower following the report, with the , which measures the greenback’s strength against a basket of six major currencies, dipping 0.13% to 95.31 late Friday. The index still ended the week up 0.6%, its second straight weekly gain.
Hawkish Fed speakers and strong U.S. economic reports have supported the greenback in recent weeks.
The report that the Federal Reserve will press on with plans to raise interest rates again in December and beyond.
Interest rate increases and higher U.S. bond yields dampen appeal for gold, which offers no yield. They also tend to boost the dollar. A stronger dollar can make dollar denominated assets, like gold, more expensive for potential buyers holding other currencies.
The yellow metal ended the third quarter down 4.6% after falling 0.9% in September as rising U.S. interest rates and the dollar’s march higher this year weighed.
Elsewhere in precious metals trading, settled up 0.62% at $14.680 a troy ounce, for a weekly loss of 0.73%. settled at $825.30, 0.1% higher for the day, to end the week up 0.83%.
Among base metals, ended at $2.759, down 0.67% for the day, extending its weekly loss to 1.29%.
, Investing.com has compiled a list of significant events likely to affect the markets.
Monday, October 8
Financial markets in Japan will be closed for a holiday.
Markets in Canada will be closed for the Thanksgiving holiday.
In the U.S., the stock market will be open, but the bond market will be closed for Columbus Day.
Tuesday, October 9
Australia is to release data on business confidence.
Wednesday, October 10
New York Fed President John Williams is to speak at an event in Bali.
The UK is to publish its monthly GDP report, along with data on manufacturing and industrial production.
The U.S. is to release a report on producer price inflation.
Thursday, October 11
The European Central Bank is to publish the minutes of its latest rate setting meeting.
The U.S. is release figures on consumer price inflation along with the weekly report on initial jobless claims.
Friday, October 12
China is to publish its latest trade figures.
The U.S. is to round up the week with preliminary data on consumer sentiment.