Gold price shows biggest monthly drop since 2016 ahead of US jobs data and hawkish Fed stance

Gold price in India reported its biggest monthly decline since November 2016, as upcoming U.S. jobs data and U.S. Federal Reserve kept investors on the sidelines. On Multi Commodity Exchange, August gold futures were trading flat, below the crucial Rs 47,000-mark, at Rs 46,550. In the previous session, gold futures ended at Rs 46,555 per 10 grams. Silver September futures were ruling at Rs 68,340 per kg, up Rs 66 or 0.10 per cent, as against the previous close of Rs 68,274 per kg. 

Globally, spot gold was steady at $1,761.80 per ounce, and US gold futures fell 0.1 per cent to $1,761.80. For the month, prices were down 7.6 per cent. For the quarter, gold had risen 3.2 per cent. Gold prices were set to post their worst month since November 2016 on the US Federal Reserve’s shift to a hawkish policy stance, according to Reuters.

Bullion prices are down about 8% for the month, weighed down by the Fed’s sudden hawkish shift. But they are up nearly 3% for the quarter. Equity markets remains strong as the economy recovers, and has the potential to subdue prices of gold, as it is considered as safe haven assets. 

The U.S. Labor Department expected to report a gain of 690,000 jobs in June, compared with 559,000 in May, according to a Reuters poll of economists. Meanwhile a “very optimistic” Federal Reserve Governor Christopher Waller on Tuesday said the U.S. central bank may need to start dialling down its massive asset purchase programme as soon as this year to allow the option of raising interest rates by late next year.

Silver was trading at $25.74 per ounce. “While outperformance is likely, we see limited prospect of a rising silver price in a falling gold market,” Morgan Stanley said in a note, adding, it was holding its forecast for silver at a flat $25 to mid-year 2022.

Palladium lost 0.2% to $2,673.18 per ounce, and was set for a second straight month of decline. Platinum fell 1.4% to $1,052.05 and was set for its biggest monthly and quarterly drop since March 2020.

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