Gold surged and dipped dramatically during Friday's volatile session, ultimately finishing the week with a solid 4% gain and a new all-time high above $US2,500 an ounce.
The driving forces behind these price fluctuations were growing market valuation concerns and weak July jobs and manufacturing data. Immediately following this data, investors shifted their outlook from an anticipated rate cut to a looming economic slowdown.
Gold settled around $US2,435 an ounce on Thursday but spiked in Asia on Friday as markets sold off in response to the weak manufacturing data. It opened the Comex Friday session above $US2,490 an ounce and continued to rise.
After reaching a peak of $US2,522 an ounce following the 8:30 AM jobs data release, gold retreated to a low of $US2,461 before recovering to close at $US2,486 an ounce.
The Australian dollar gold price, as calculated by the World Gold Council, hovered around $A3,753 an ounce throughout the week.
While the metal finished lower than its opening price, it closed higher than Thursday's, supported by a weakening US dollar and plummeting Treasury bond yields. The 10-year note ended the week at 3.78%, and the two-year note at 3.89%. The 10-year benchmark bond yield declined by more than 40 points for the week and 72 points over the past three months.
Equities and commodity markets experienced widespread losses after the US Bureau of Labor Statistics reported that the country added only 114,000 jobs last month. This figure fell significantly short of the expected 185,000, and the unemployment rate rose from 4.1% to 4.3%. The data reinforced the notion of a slowing US economy due to high interest rates. Although the Federal Reserve maintained its current rate at this week's policy meeting, Chair Jerome Powell indicated the possibility of rate cuts starting in September.
However, the market is now leaning towards a more aggressive 50 basis point rate cut next month, with the CME Fedwatch prediction tool showing a 38.5% probability of a 25 basis point cut and a 71.5% probability of a larger cut.
The dollar depreciated significantly following the employment report, with the ICE dollar index falling 1.20 points to 103.22. The Australian dollar managed to hold above the 65 US cent level, closing at 65.11.
Comex silver and copper prices increased. Silver gained 2.2% for the week, closing at $US28.68, while copper rose 0.45% to $US4.13 a pound, recovering from a potential decline below $4 due to weak Chinese economic activity reports earlier in the week.
Surprisingly, iron ore prices also increased, gaining 40 cents a tonne to $103.35 on the SGX platform by Friday's close. This is despite falling below $US100 a tonne twice during the week and receiving no support from Chinese data or government policies.
