Gold Rate Steadies As Surprise US Jobs Rebound Dents Demand

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Gold Rate Steadies As Surprise US Jobs Rebound Dents Demand

Gold prices have gained more than 11%so far this year

Gold inched up on Monday although safe-haven demand remained subdued, after prices fell to a more than one-month low in the last session as an unexpected jump in US employment boosted hopes for a swift economic recovery. Spot gold was up 0.1 per cent at $1,682.57 per ounce by 9:21 am. US gold futures rose 0.5 per cent to $1,691.40 per ounce. Bullion dropped as much as 2.4 per cent to $1,670.14 on Friday after data showed US non-farm payrolls rose by 2.509 million jobs last month – in contrast with consensus estimates of a fall of 8 million jobs.

“The narrative around the unemployment data presents a whole smorgasbord of risks to gold going forward, and the upside is going to be quite limited,” said Stephen Innes, chief market strategist at financial services firm AxiCorp.

“Gold is going to struggle to clear the $1,700 level again.”

The strong jobs data bolstered demand for risky assets like stocks, which advanced on Monday.

Market participants are now waiting for the Federal Reserve’s two-day policy meeting ending on Wednesday, though they have stopped pricing in the possibility that the Fed will adopt negative rates after the surprise recovery in employment.

Gold prices have gained more than 11 per cent so far this year as central banks across the globe cut interest rates and unveiled massive stimulus to support the coronavirus-damaged economy. However, they have shed about 4 per cent since hitting a seven-year peak in May amid hopes for a quicker-than-expected economic recovery.

Reflecting investor sentiment, holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dipped 0.4 per cent to 1,128.11 tonnes on Friday.

Speculators also cut their bullish positions in COMEX gold, and increased them in silver contracts in the week to June 2, the US Commodity Futures Trading Commission said on Friday.

Among other metals, silver was up 0.6 per cent at $17.47 per ounce and palladium rose 0.7 per cent to $1,965.92, while platinum declined 2 per cent to $819.25.

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