Gold Prices Fall as Jobs Data Remains Strong

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  • Strong jobs data pushes gold lower
  • Rate hikes and positive sentiment increase pressure
  • Other precious metals also fall

In commodities news, gold prices fell on Friday to post a weekly decline and end the day near $1,920. This is a daily decline of nearly 0.7% on spot gold and a decline of nearly 1.5% on the week. A number of factors combined to create the move, with strong US jobs data being a particular factor at the end of the week. At the same time, the rising rate environment and the fact that market sentiment is gaining positivity have all put pressure on gold. Other precious metals felt similar pressure, especially on Friday to end the week lower.

Good employment figures weigh on gold

Strong NFP numbers released on Friday accelerated gold’s decline. The precious metal ended the day nearly 1% lower as these figures from the Bureau of Labor and Statistics showed unemployment at 3.6%, lower than the 3.7% expected. 431,000 payslips were added for the month of March. That’s slightly below what analysts had expected at 490,000, but still signals a strong and recovering labor market.

The robust nature of this data has kept the mood positive that the economy is back on its feet. This has led to a move away from the traditional safe haven of gold and other precious metals. The US Dollar also showed some early signs of weakness throughout the week. A pullback of almost 1% to around $1,920 is evidence that gold is starting to feel the pressure of this positive momentum.

Aggressive Fed Should Cap Gold’s Potential

The more positive than expected jobs data makes it all the more likely that the Fed will move forward more aggressively with its rate hikes. There had previously been doubts about the current situation between Russia and Ukraine, although it also seems to be moving in the right direction.

The two-year low in unemployment has led some analysts to expect a 50 basis point interest rate hike from the Fed and Jerome Powell as the next step. Such a move would represent a significant rate hike that would likely reduce gold’s upside even further.

Other precious metals also decline

While gold prices fell substantially on Friday, they weren’t the only precious metal to experience a drop. Silver prices were the biggest losers elsewhere in precious metals. These fell nearly 1.5% on the day, despite being above $25. Platinum prices also fell about 0.5% below the $1,000 mark.

The relative outlier for the day was palladium which gained 0.5% to end above $2,260. Next week’s focus will be on the Fed and geopolitics in particular, both of which have the ability to move commodity prices in either direction.

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