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Gold Heads for Worst Day in a Year After Jobs Report

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07/05/2019 | 10:45am EDT

By Amrith Ramkumar

Gold prices slid Friday following an upbeat June jobs report, heading toward their largest one-day decline in more than a year as traders dialed back bets that the Federal Reserve will lower interest rates.

Gold for August delivery, the most-active futures contract, fell 2.1% to $1,391.40 a troy ounce on the Comex division of the New York Mercantile Exchange and was on pace for its worst day since June 2018. The reversal came after anticipation that the Fed will aggressively cut rates later this year had pushed the safe-haven metal to roughly six-year highs earlier in the week.

But some of the bets on easing monetary policy were unwound Friday after figures showed the U.S. added more jobs than expected last month, pushing up Treasury yields and the dollar. That was a negative for gold because higher yields make the metal less attractive to yield-seeking investors and a stronger dollar makes it more expensive for overseas buyers.

The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, rebounded 0.6%. The yield on the benchmark 10-year U.S. Treasury note surged to 2.058%, according to Tradeweb, from 1.952% a session earlier. Bond yields rise as prices fall. Their slide to multiyear lows recently has driven gold higher.

Despite Friday's market reaction, some analysts still expect the Fed to lower interest rates amid heightened trade uncertainty and other signs of slowing economic activity. Contained wage growth and muted inflation have also prompted bets on lower interest rates, potentially boosting gold moving forward.

Investors will weigh minutes from the Fed's last meeting and fresh inflation data next week to gauge the trajectory of the U.S. economy and interest-rate policy.

Elsewhere in commodities, U.S. crude-oil futures swung between small gains and losses and were recently up 0.3% at $57.50 a barrel on the New York Mercantile Exchange. Brent crude, the global price gauge, added 1.5% to $64.23.

Natural-gas futures rebounded 4.4% to $2.390 a million British thermal units, boosted by a bout of warm weather that is expected to lift demand as more people turn on their air conditioners.

Stocks mentioned in the article
ChangeLast1st jan.
EURO / US DOLLAR (EUR/USD) 0.18% 1.16551 Delayed Quote.3.77%
GOLD 0.73% 1876.37 Delayed Quote.22.60%
LONDON BRENT OIL 1.20% 42.28 Delayed Quote.-36.77%
RISE, INC. 0.00% 26 End-of-day quote.-13.33%
THE GLOBAL LTD. 0.45% 222 End-of-day quote.-52.87%
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