Gold prices fell during Thursday’s Asian trading with commodity indices rebalancing and the United States reporting jobs data.
Spot gold was down 1% to US$4,440 per ounce by 3:15 pm AEDT (4:15 am GMT). Silver dropped 3.7% to $78.01.
Gold and silver prices are likely to be volatile this week and next week as the Bloomberg Commodity Index and S&P GSCI undergo annual rebalancing, SP Angel analysts wrote. These indices are rebalanced each January based on market liquidity.
“The rebalancing forces passive funds to sell overweight assets, e.g. gold and silver and buy underweighted assets with specific rules limiting a single asset to 15% in the case of BCOM [Bloomberg Commodity Index].”
“We expect the move to add marginally to base metals as the indices rebalance away from the massive gains seen in precious metals with the greatest impact on oil and gas and soft commodities.”
The U.S. is also reporting jobs data this week, with Minneapolis Federal Reserve President Neel Kashkari saying on Monday that the labour market would be a deciding factor in determining future rate cuts.
Job openings decreased by 303,000 to 7.15 million in November, a 14-month low, according to the Job Openings and Labor Turnover Survey (JOLTS) report.
Nonfarm payrolls for December will be released on Friday (Saturday AEDT), with Reuters-polled economists projecting an increase of 47,000 workers in the private sector in December.
