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Gold prices have continued their run to record levels near $2,200 an ounce, triggered by expectations of lower US interest rates and persistent demand from Chinese households, and gold lovers may have reason to seek the $2,500 before the end of the year.
Gold hit an all-time high of $2,185.19 an ounce on Friday after the United States reported much higher-than-expected job creation of 275,000 jobs in February but a rise in the unemployment rate and a moderation in wage increases, boosting hopes that inflation has cooled enough for the Fed to begin cutting rates later this year.
The dollar index fell slightly, making gold cheaper for overseas buyers, while the yield on 10-year US Treasuries fell 9 basis points on the week to 4.09%, its lowest in five weeks .
The jobs report “will be seen as a tool that will keep the Fed on track for June,” metals trader Tai Wong told Reuters, and “gold prices will continue to rise overall, although it may be a short consolidation is necessary”.
First-month Comex gold (XAUUSD:CUR) for March delivery is closed +0.9% Friday at $2,178.60/oz, another record and its seventh consecutive daily gain; for the week, the front-month contract rose 4.4%.
First March Comex Silver (XAGUSD:CUR) is out -0.1% Friday, but jumped 5.1% to $24.339/oz this week.
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The world’s central banks remain net accumulators, with the Peoples Bank of China adding gold to its reserves for the 16th consecutive month in February.
According to official data, bullion held by the PBOC increased by about 390,000 troy ounces last month, bringing total reserves to 72.58 million ounces, equivalent to about 2,257 tonnes.
Buyers in China’s domestic market also showed strong demand for gold, undeterred by high prices, as concerns over the country’s weak economic recovery prompt a flight to safe havens.
“There are a number of central banks that are buying a grand total of about 1,000 tons a year, and that sends a message to the broader market” about possible long-term changes to the global monetary system, the analyst told Bloomberg StoneX financial advisor Rhona O’Connell.
Yet gold-backed ETFs posted another month of outflows in February, extending their losing streak to nine months, with holdings in North America falling to four-year lows.