Gold Closes at Four-Month Low, Gold Coin Premiums Hit Despite Good Physical Gold Demand
It was a rough week for gold, with the commodity shedding 5% of its value and closing lower everyday of the week as traders priced in the impact of a Fed rate hike by year-end.
Early in the week the commodity initially ticked lower following a jump in the US dollar. A higher greenback sent gold below its level of support. After trading in a tight range for weeks, as gold fell below $1,300 per ounce it triggered a sell-off. On Friday, gold closed at $1,251.90 per ounce. Goldman Sachs in a note today mentioned that a fall below $1,250 could be a buying opportunity for the metal.
During the session the metal seesawed, but then moved convincingly lower as traders decided that the September jobs report, although a slight disappointment, did not rule out a December rate hike. Meanwhile, the fact that wages continue to increase as employers compete to attract employees increased inflation expectations.
While gold experienced a sell-off this week, according to Goldman Sachs, physical demand for gold through ETFs remained strong, and the bank is optimistic about an increase in physical gold demand from China later in the fourth quarter. Chinese buyers, who are often drawn to the physical gold market when prices fall, thereby limiting the losses, were absent this week due to the week long National Day Holiday.
Premiums on gold coins were negatively impacted by the fall in gold this week. Compared to last week, American Gold Eagle premiums came in at $57.06 on Friday, down from $59.31 last Friday, American Buffalo premiums fell to $58.33 from $60.73 and Canadian Maple Leaf fell to $44.38 from $46.21.