Gold Fell To New Monthly Lows Following Strong US Employment Data -

Gold Fell To New Monthly Lows Following Strong US Employment Data

Jun 08, 2024Jeremy ParkinsonFinance0

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Gold fell to a multi-week low after US labor market data exceeded expectations.

China’s People’s Bank halted its 18-month gold buying spree, which exerted downward pressure on the XAU/USD cross.

US Treasury yields surged, with the 10-year yield up to 4.43%, which bolstered the greenback and pushed gold’s price lower.

Traders will eye the US inflation data and Fed policy meeting next week.

Gold prices plummeted to a four-week low after the US Bureau of Labor Statistics (BLS) revealed that the labor market remained strong, and China halted its purchase of the golden metal. As the XAU/USD cross traded at around $2,295, the non-yielding metal dropped by more than 3%.The latest US Nonfarm Payrolls report for May revealed that the labor market added more people to the workforce, smashing estimates. Despite that, the same report revealed an uptick in the Unemployment Rate, while Average Hourly Earnings witnessed a slight increase.After the data release, XAU/USD extended its fall, which began during Friday’s Asian session. News that the People’s Bank of China paused its 18-month bullion buying spree weighed on the precious metal. “Holdings of the precious metal by the PBOC held steady at 72.80 million troy ounces for May,” according to MarketWatch.Gold traveled from $2,387 to $2,304 during Friday’s trading session. Additionally, US Treasury bond yields were skyrocketing, with the 10-year bond yield climbing 14 basis points to 4.43%, underpinning the greenback. The DXY, an index of the US dollar against six other currencies, increased 0.79% to 104.91.Market participants will turn to next week’s US inflation data and the Federal Reserve’s (Fed) monetary policy meeting. The US Consumer Price Index (CPI) is expected to remain steady, but a re-acceleration could trigger further losses for the golden metal.

Market Movers: Gold’s Price was On The Defensive after Strong US Jobs Report

The US Bureau of Labor Statistics reported that May’s Nonfarm Payrolls increased by 272,000, surpassing the forecast of 185,000 and April’s figure of 165,000.

The Unemployment Rate jumped from 3.9% to 4%, while Average Hourly Earnings increased by 4.1% year-over-year, up from the previous reading of 4%.

A stronger-than-expected US NFP report sparked speculation that the Fed will keep rates higher for longer.

After the data release, the December 2024 CBOT fed funds rate futures contract expected 27 basis points (bps) of easing, 12 bps less than on Thursday.

Odds for a Fed rate cut in September were lowered from 55% to 47%.

Technical Analysis: Gold Price Collapsed Below $2,300
Gold prices retreated sharply and appeared to form a head-and-shoulders chart pattern during Friday’s trading, which could further lower the price of the yellow metal. Momentum shifted bearish due to the Relative Strength Index (RSI) piercing below the 50-midline, which seemingly indicated that sellers were in charge.Therefore, further gold weakness and sellers could push the spot price below $2,300 in the coming days. Once cleared, the next stop would be the May 3 low of $2,277, followed by the March 21 high of $2,222. Further losses may lie beneath, with the buyers’ next line of defense at around the $2,200 figure.Conversely, if gold buyers could lift prices above $2,350, look for a consolidation in the $2,350-$2,380 area. More By This Author:GBP/USD Price Analysis: Struggles at 1.2800 and tumbles toward 1.2720s post-NFPGold Rallies Above $2,370 As Traders Await Crucial US Nonfarm Payrolls Report Silver Price Analysis: XAG/USD Collapses Below $30.00 As Double Top Emerges