Gold Prices Falls Below $2300 as U.S. Job Market Grows Stronger
Gold prices have fallen by about $20 as the US job environment improves. According to the most recent Bureau of Labor Statistics data, nonfarm payrolls in the United States climbed by 272,000 in the last month, considerably exceeding the expected 182,000 gain.
Even while more people found work, the unemployment rate increased slightly to 4.0%, up from 3.9% in April. Experts expected the unemployment rate to remain unchanged.
Before this job data, gold prices were already under pressure. This was due to the People's Bank of China's announcement that it did not acquire any gold last month, bringing an 18-month gold purchasing streak to an end.
The high job growth increased the selling pressure on gold. Analysts believe that the Federal Reserve may postpone decreasing interest rates this year if the labour market grows.
Gold futures for August were last traded at $2,333.40 per ounce, down more than 2% on the day.
Investors are beginning to doubt that there will be a rate cut in September. On Thursday, there was a more than 70% possibility of a rate cut after the summer, but that has now reduced to around 50% following the new job statistics.
The study also stated that wages rose by 0.4% last month, exceeding the predicted 0.3% gain, which may keep inflation high. Over the last year, average hourly wages have increased by 4.1%.
Gold futures for August were last traded at $2,333.40 per ounce, down more than 2% on the day.
Investors are beginning to doubt that there will be a rate cut in September. On Thursday, there was a more than 70% possibility of a rate cut after the summer, but that has now reduced to around 50% following the new job statistics.
The study also stated that wages rose by 0.4% last month, exceeding the predicted 0.3% gain, which may keep inflation high. Over the last year, average hourly wages have increased by 4.1%.
However, the Labor Department revised previous months' job numbers downward. May's data were updated to 165,000 from an early estimate of 175,000, and March's figures were revised to 310,000 from 315,000.
Despite the robust job increase, several analysts highlight underlying concerns. Axel Merk, President of Merk Investments, said that the number of people working two jobs has been at an all-time high since December.
Furthermore, the survey revealed a decline in full-time positions and an increase in part-time ones.
According to Michael Brown, Senior Research Strategist at Pepperstone, the employment report is causing markets to reconsider their interest rate predictions, but it is unlikely to modify the Federal Reserve's intentions significantly. Inflation data remains the Fed's top worry.
Despite the robust job increase, several analysts highlight underlying concerns. Axel Merk, President of Merk Investments, said that the number of people working two jobs has been at an all-time high since December.
Furthermore, the survey revealed a decline in full-time positions and an increase in part-time ones.
According to Michael Brown, Senior Research Strategist at Pepperstone, the employment report is causing markets to reconsider their interest rate predictions, but it is unlikely to modify the Federal Reserve's intentions significantly. Inflation data remains the Fed's top worry.
"FOMC members are focused on controlling inflation and are likely to say next week that they are not ready to cut rates yet," he said. "The upcoming May CPI report, due next Wednesday, will be more important, especially since the core CPI recently dropped to a nearly three-year low in April."
Future Predictions:
Looking ahead, if the US employment market continues to improve well, the Federal Reserve may postpone interest rate cuts to keep inflation under control. This could indicate that gold prices will remain under pressure. Investors will closely monitor upcoming economic releases, particularly the May CPI report, to determine the Fed's next measures and their potential impact on the markets.