Gold moves little after worst week in 7 months, Powell talk awaited

© Reuters.

By Ambar Warrick

Investing.com -- Gold prices were muted on Monday after logging their worst week in seven months, with focus now turning to a discussion with Federal Reserve Chair Jerome Powell after stronger-than-expected U.S. employment data ramped up fears of more monetary tightening.

Gold prices plummeted 2.5% on Friday and lost over 3% last week after labor data showed that U.S. employment remained far stronger than expected in January. The readings spurred fears that the Fed has enough economic headroom to keep raising interest rates, and drove a recovery rally in the dollar and Treasury yields.

This weighed on most metal prices, with gold - which had a strong run-up to Friday’s data - suffering deep losses. The yellow metal fell below the key $1,900 support for the first time in nearly a month.

Spot gold was flat at $1,864.93 an ounce, while gold futures expiring in April sank 0.2% to $1,876.40 an ounce by 18:50 ET (23:50 GMT).

Markets are now awaiting more economic cues from a discussion with Chair Jerome Powell at the Economic Club of Washington D.C. on Tuesday. Any comments on the recent labor data and the path of inflation will be closely watched.

The Fed had last week raised interest rates as expected and signaled that it will keep doing so in the near-term. This spurred increased bets that the central bank could pivot away from its hawkish stance by the year-end.

But these bets were swiftly reversed by Friday’s strong labor data, which also fed into fears that U.S. inflation could remain elevated for longer than expected.

Other precious metals also retreated on Friday, and were trading in a mixed range on Monday. Platinum futures rose 0.2% after plummeting below $1000 an ounce, while silver futures extended losses, falling 0.4% to $22.340 an ounce.

Among industrial metals, copper prices rose slightly from a nearly 4% loss last week, as markets weighed a potential demand recovery in China against increased fears of a global recession. Rising interest rates and high inflation are expected to severely weigh on the global economy this year.

High-grade copper futures rose 0.4% to $4.0475 a pound.

Focus this week is on more economic cues from major copper importer China, as well as civil unrest in world no.2 copper exporter Peru.