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Gold closed its first back-to-back weekly loss since February, extending a correction from last month’s rally as investors appeared to take profits as Middle East tensions eased.
Gold gave up initial gains Friday that followed the release of data showing U.S. non-farm payrolls increased by a smaller than expected 175K jobs last month, lifting investors’ hopes that the economy is finally cooling down, which in turn dampened interest in safe haven commodities such as gold.
“Gold’s initial surge on the Goldilocks employment report attracted a fair amount of profit-taking, which suggests bulls are growing more cautious after April’s remarkable rally and a rather ordinary response after [Fed Chairman Jerome] Powell’s friendly comments on Wednesday,” independent metals trader Tai Wong told Reuters.
Front-month Comex gold (XAUUSD:CUR) for May delivery finished flat on Friday but ended -1.5% for the week to $2,299.00/oz, while front-month May silver (XAGUSD:CUR) closed the week -2.9% to $26.445/oz after falling 0.5% on Friday.
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Gold may have pulled back a bit from its April record highs, but it should still rebound to ~$2,700/oz by year-end in a base case scenario, Goldman Sachs analysts say.
Central banks and Asian household spending continue to drive demand, and interest rates – which hurt sentiment toward non-interest bearing bullion – should move lower later in the year, Goldman says, noting global gold purchases have tripled since Russia’s invasion of Ukraine, and new geopolitical or financial shocks may push prices higher.