As investors made a dash for the US dollar following concerns that commodities will be affected by the global economic slowdown, gold remained on track to its biggest weekly loss for the month even though it was able to recover slightly on Friday.
The slowdown in the manufacturing sector in the US, Europe, and China has resulted to increased concerns on a slowdown in the global economy. This follows disappointment of investors with the non-announcement of a better policy by the US Federal Reserve that would have stimulated the US economy.
Spot gold prices increased by $0.67 as it went up to around $1,566.09 per ounce following its 2.5 percent decline on Thursday, which was the biggest decrease in one day for the precious metal since February. Gold futures in the US for delivery in August increased by $1.50 per ounce s it went up to $1,567 per ounce.
The US dollar also increased to its highest level in around one and a half weeks against a number of major currencies on Friday as it remained strong following the downgrade of a number of major banks in the world by Moody’s (NYSE:MCO). The credit ratings of fifteen companies were downgraded by Moody’s on Thursday by around three levels.
The Nikkei of Japan declined by around one percent on Friday following the release of a slowdown in the growth of the manufacturing sector in the United States which increased concerns on the slowdown in growth in China and Europe.
For the second day in a row, commodities declined as copper, oil, and corn went down by at least three percent following a weaker outlook in the demand for raw materials due to the release of the latest global economic data. Indian gold traders have also waited for prices of the precious metal to go down further before making their purchases despite a decline of at least 0.5 percent in gold prices.