Nigeria’s local gold market briefly dipped in the last trading session of the week, with 24-karat gold settling near ₦176,000 per gram.
According to Nairametrics, the sell-off was net negative for local investors and jewellers, who have had to contend with turmoil in overseas equity markets.
Metal traders are reassessing staple safe-haven instruments as sentiment shifts away from risky United States equities and the macroeconomic environment evolves.
The ‘bloodbaths’ in global stock markets are likely to force institutional investors to sell gold to meet margin calls when they de-leverage, since their risky equity holdings are losing money. Gold then draws in capital as investors avoid risky share markets.
Nigeria’s institutional investors and affluent women often hedge with spot gold to protect themselves from systemic inflation and naira devaluation. However, a stable naira exchange rate of roughly ₦1,350 per dollar has also weakened gold prices in Nigeria compared with past years.
Nigerian gold prices are now a mirror of the international spot gold market (XAU/USD). If the global spot price consolidates or retraces, local prices will do the same, without being hidden behind currency losses.
The precious metal fell on Friday after a ‘blowout’ US employment report dashed expectations and set the stage for a Federal Reserve rate hike in December.
Spot gold (XAU/USD) dropped almost 1 per cent to settle at $4,060 per ounce, after reaching $4,106 per ounce in the last trading session of the week.
The correction was driven by the October Non-Farm Payrolls (NFP) report, which showed the US economy created 165,000 jobs against a forecast of only 65,000.
The September NFP figure was also revised from 29,000 to 60,000. The wider job gains pushed the US unemployment rate down to 4.1 per cent.
Adding to the positive economic picture, the University of Michigan Consumer Sentiment Index for November rose to 51 from 48.
The one-year inflation forecast declined to 4.3 per cent from 4.7 per cent. This indicates that consumers are optimistic about the economy despite recent energy price fluctuations.
The strong data sent the US Dollar Index (DXY), which compares the greenback’s strength to a basket of six major currencies, up 0.62 per cent to a level above 102 points.
Markets also adjusted their rate hike expectations after the employment figures. The probability of a Fed rate increase by December, as implied by the CME FedWatch Tool, rose to 77 per cent from 67 per cent on Thursday.
St. Louis Fed President Alberto Musalem said that while “people remain concerned about inflation at the current level,” the longer-term outlook for inflation expectations is well-anchored. He said the heightened price pressures are due to energy shocks and the buildout of AI infrastructure.
Although macroeconomic figures pressured bullion, interest in safe-haven assets remained amid continued geopolitical tensions in the Middle East.
The US and Iran are still negotiating, and there are continued indications that a breakthrough could be imminent.
Nonetheless, security conditions remain serious amid new reports of Houthi attacks on Saudi Arabia and assessments that Tehran is preparing a military response.
Middle Eastern sources, quoting Israeli media, also reported that the US is likely to launch a targeted attack to compel Iran to sign a better deal.
Gold traders are now turning their attention to next week’s US Consumer Price Index seen as the next conclusive indicator of US inflation and Federal Reserve policy, after gold retreated from its highs following the surprise jobs data.
