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Investing.com - This week precious metal traders will closely monitor movements in the U.S. dollar, one of the biggest drivers for gold, ahead of a U.S. jobs report that could underline the Federal Reserve’s case for patience when it comes to future interest rate hikes.
Markets expect the U.S. nonfarm payrolls report for February to show 180,000 new jobs and an unemployment rate of 3.9%, but wage data will be particularly closely watched at a time when inflation remains low.
Other U.S. economic data reports on tap this week include figures on new home sales and the Institute for Supply Management’s non-manufacturing index on Tuesday, an update on private sector hiring on Wednesday and housing starts on Friday.
The dollar rose on Friday, hitting 10-week highs against the yen as market sentiment was boosted by a more upbeat outlook on some major world economies and the prospect of a trade deal between the U.S. and China.
The U.S. dollar index, a gauge of the currency’s value against six major currencies, rose 0.35% on Friday, posting its largest daily percentage gain in two weeks. For the month of February the index was up 0.78%.
The stronger dollar saw gold prices fall more than 1%, to hit their lowest level since January.
Gold futures settled down 1.65% at $1,294.45 on the Comex division of the New York Mercantile Exchange, having fallen below the psychologically important $1,300 level for the first time since January 25. For the week, prices were down 2.52%, the most since August 2018.
"The U.S. dollar index and two-year Treasury yields have moved up over the last couple of days and these factors have prompted people to take some profits (in gold)," said Bart Melek, head of commodity strategies at TD Securities in Toronto.
"We are also seeing a continued reaction to Federal Reserve statements where hikes are still on the menu, given that data seems to be fairly strong in the United States."
Higher global stocks also weighed on gold, analysts said.
"Better sentiment on the stock markets and a reluctance by the physical gold investors are weighing on its price," Commerzbank analysts said.
Elsewhere in metals trading, silver dropped 2.52% to $15.20 per ounce after hitting $15.14, a low last seen on Jan. 22. The metal was down 4.5% so far for the week, its biggest decline since the week of Feb. 2, 2018.
Copper ended at $2.926, down 0.75% for the day, extending the week’s losses to 0.61%.
Ahead of the coming week, Investing.com has compiled a list of significant events likely to affect the markets.