Gold prices and the corresponding SPDR Gold Trust (ETF) (NYSEARCA:GLD) pulled back in Asia and were trending lower in Europe on Friday. Debate on when the U.S. Federal Reserve might raise interest rates continues to weigh on the price of the yellow metal.
Prospects of a near-term rate hike appear complicated. Though minutes from the July meeting of Fed officials showed a lack of consensus on when the monetary regulator should move to review rates, upbeat jobless data has put a spin on the rates debate.
The Labor Department reported that initial jobless claims shrank by 4,000 to just 262,000 in the last week. Economists were looking for a decrease of jobless claims by 1,000.
Further adding to the uncertainty over lending rates hike was a comment that came Thursday from the President of San Francisco Federal Reserve Bank, John Williams. The official expressed his support for a near-term rate increase, saying that the U.S. economy would be hurt more if the Fed took too long to act.
The upbeat jobless data and the hawkish remarks by Williams seem to be limiting investor appetite for gold.
How gold is behaving
Prices of gold futures for December delivery had touched a session low of $ 1,350.55 in European morning trading. The price of the yellow metal dipped 0.28% in Asian trading. Gold gained 0.62% a day earlier.
Profit-taking also seemed to be playing a role in Friday’s pullback in the price of the commodity.
Prices of gold are up nearly 27% so far in 2016. Analysts see gold holding steady or gaining slightly even if the Fed were to surprise with a near-term rate increase. They cite the uncertainty of the U.S. Presidential election as a reason traders may not be selling gold aggressively.
“The longer the Fed delays a rate rise, the better for gold,” said Jim Steel of at HSBC.
Other precious metals
Other than gold, prices of silver contracts for September delivery were seen sliding 0.98% in European morning trading. Copper futures were also trending down about 0.25% around the same time in Europe.