A brighter than expected employment data released Friday has reaffirmed the theory that the U.S. economy is on track, but the confirmations have led to plunge in the gold prices. The weakening of the yellow metal left sharp marks on gold companies such as Kinross Gold Corporation (USA) (NYSE:KGC). The unemployment rate in the U.S. came to a seven-year low that drove the bullion too down.
The gains recorded in Bullion in 2015 have been wiped out now, while the gold-backed exchange traded funds were the biggest weekly decliners. A report released on Friday suggests that American employers hired more employees than expected in February. The data served as a catalyst to spike hopes that the Federal Reserve will raise interest rates sooner than later. Under such circumstances, the demand for the yellow metal is tarnishing as the asset offers returns through price gains. The slump in gold demand did leave an impact on gold mining companies such as Kinross Gold Corporation (USA) (NYSE:KGC).
The CIO of Three Mountain Capital Management L.P., Kevin Chen confirmed that people no longer see the need to keep safe-haven assets. He added that the employment report is a strong indicator of recovery in the U.S. economy. The gold futures for April delivery have declined by 2.7% to $1,164.30 on the Comex, recording a biggest drop since December 19, 2013. It signals that the rally in gold might just be over after a constant surge during 2008-2011, when the Federal Reserve kept interest rates near zero. Meanwhile, the Fed has indicated that it will remain “patient” before raising the borrowing costs, the Central Bank’s Chair Janet Yellen said that rate hikes will depend on economic data.
As the attraction of safe-haven assets is losing sheen, the shares of Kinross Gold Corporation (USA) (NYSE:KGC) too inched down by 8.73% to $2.51 during the previous trade day.
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