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Gold was down on Friday morning in Asia, but remained near the key $1,800 mark as investors await the latest U.S. jobs report.
Gold futures were down 0.39% to $1,801.90 by 1:24 PM ET (5:24 AM GMT) and were set for their worst weekly performance since mid-June 2020.
The U.S. report, including non-farm payrolls data, is due later in the day and could dictate the U.S. Federal Reserve’s next policy move.
“If we get a combination of really solid payroll numbers coming on the back of a hawkish rhetoric by the Fed, I think it’ll spook any interest rate sensitive markets like gold… That’s why we’re seeing risk reductions right now,” SPI Asset Management managing partner Stephen Innes told Reuters.
However, a complete meltdown in gold is highly unlikely and support level of $1,790 should hold, he added.
Oil prices extended gains on Friday, but remained on track for their biggest weekly decline since March as travel restrictions to curb the spread of the COVID-19 Delta variant are raising concerns about fuel demand.
Brent crude oil futures were up 47 cents at $71.76 a barrel at 0640 GMT while U.S. West Texas Intermediate (WTI) crude futures rose 45 cents to $69.54 a barrel, but both contracts have given up 6% this week, the most since March.
“The price action we see now is really a function of the macro picture,” said Howie Lee, an economist at Singapore’s OCBC bank.
“The Delta variant is now really starting to hit home and you see risk aversion in many markets, not just oil.”
Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and cancelled flights, threatening fuel demand.
“At least 46 cities have advised against travelling, and authorities have suspended flights and stopped public transport. This could impact oil demand as it comes towards the end of the summer travel season,” ANZ said in a report.
Daily new COVID-19 cases in the United States have climbed to a six-month high.
However, worries over rising tensions between Israel and Iran limited the decline in prices.
Asian shares lost ground on Friday despite gains on Wall Street, as the spread of the Delta variant of the coronavirus across the region heightened worries about its economic recovery.
Uncertainty about Chinese policy has also left investors in Asia nervous, though this week regional indices clawed back some of last week’s losses caused by Beijing’s crackdowns on the technology and education sectors.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.25% on Friday, dragged down by Chinese blue chips, which fell 0.87% and Korea down 0.35%.
Japan’s Nikkei rose 0.26%.
“There are two main drivers of volatility in the market this week, firstly everything surrounding the Chinese regulatory drive…and secondly the severity of Delta outbreaks around the region,” said Carlos Casanova, senior economist Asia at UBP.
“International investors are still wrapping their head around what happened in the education sector (in China). I expect that will continue to drive sentiment. The regulatory drive is not over yet, it should continue to be a factor in the next three to six months or so,” he said.
China on Friday reported 124 confirmed cases for Aug. 5, its highest daily count for new coronavirus cases in the current outbreak, fuelled by a surge in locally transmitted infections. Authorities have imposed travel restrictions in some cities.
Thailand and Malaysia both reported record daily cases on Thursday.
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