Forexpros – Last week saw gold futures climb to fresh record highs on three consecutive days, as concerns over the U.S. economic recovery and ongoing fears over sovereign debt contagion in the euro zone boosted demand for safe haven assets.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery settled at USD1,664.85 a troy ounce by close of trade on Friday, jumping 2.6% over the week, its fifth consecutive weekly gain.
Gold futures rose to a record high of USD1,683.45 a troy ounce on Thursday, eclipsing the previous high of USD1,674.15 a troy ounce it hit on Wednesday.
Gold prices have climbed to record highs in ten of the past 18 sessions.
The U.S. Department of Labor said on Friday that nonfarm payrolls rose by 117,000 in July, above expectations for an increase of 95,000, while the previous month’s figure was revised up to a gain of 46,000 from a previously reported 18,000.
The unemployment rate dipped unexpectedly to 9.1% from 9.2%, the first decline in four months.
The better-than-expected jobs data failed to ease fears that the U.S. economic recovery was stalling, after a flurry of weak data earlier in the week fuelled concerns over a possible double-dip recession.
Wall Street investment bank Goldman Sachs said in a report Friday that there was a one-in-three probability of a U.S. recession due to the worsening European crisis, the possible failure to extend payroll tax cuts and elevated levels of unemployment.
Yields on Italian and Spanish bond yields surged to euro-lifetime highs earlier in the week, fuelling concerns that the debt crisis could spill over to the region’s third and fourth largest economies.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Elsewhere on the Comex, silver for September delivery traded at a three-week low of USD38.37 a troy ounce by close of trade on Friday, dropping 2.7% over the week, while copper for September delivery plunged 8.4% on the week to trade at USD4.119 a pound, the lowest price since June 28.
After markets closed Friday, ratings agency Standard and Poor’s downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA, and kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
S&P said the debt ceiling deal reached by lawmakers to cut the federal deficit by an estimated USD2.1 trillion over a decade did not go far enough and “America’s governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed.”
In the week ahead, markets will get their first chance to react to the historic U.S. debt downgrade. Traders will also be paying close attention to Tuesday’s Federal Reserve rate announcement and its statement on monetary policy for any hints regarding further easing.
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