Weekly Report

Market Analysis 

Gold

Little changed near 2-week lows

Gold prices erased early gains to end lower on Friday as concerns over the prospect of a U.S. rate hike before the year’s end overshadowed concerns over the health of Deutsche Bank. Safe haven demand for gold waned as Deutsche Bank shares rebounded Friday following reports that it is nearing a deal to settle a mortgage-securities investigation by paying a $5.4 billion fine, well below the Justice Department’s original proposal of $14 billion. Gold prices typically rise during times of political or economic uncertainty, amid expectations that bullion will hold its value better than other assets. For the week, the precious metal ended down 1.79% as markets continued to speculate over the timing of the next Fed rate hike. The Fed raised rates for the first time in almost a decade in December and forecast rates would rise four times this year, but officials have recently acknowledged that the mixed economic recovery means rates are likely to remain lower for longer. The Fed’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely.

Official data showed that the third estimate of U.S. second quarter gross domestic product showed growth of 1.4%, revised from the previous reading of a 1.1% expansion. Analysts had expected a growth rate of 1.3%. Separately, the U.S. Department of Labor said initial jobless claims in the week ending September 24 increased by 3,000 to 254,000 from the previous week’s total of 251,000. Data also showed that the Chicago purchasing managers’ index rose to 54.2 this month from 51.5 the previous month, exceeding expectations for an uptick to 52.0. The U.S. Commerce Department said personal spending was unchanged in August from the prior month, below expectations for a 0.1% rise, and compared to a 0.4% gain in July. In the week ahead, traders will be focusing their attention on Friday’s nonfarm payrolls report, seen by many as the clearest sign on the health of the labor market, amid ongoing speculation over whether U.S. interest rates will rise this year. It is expected to show the economy added 171K jobs in September. The unemployment rate is expected to come in unchanged at 4.9% and average hourly earnings are expected to rise from 0.1% to 0.2%.