There is important data that will affect gold prices. Newly arrived employment reports from America. There’s a huge disparity in the two jobs reports released this week. Yesterday, ADP released private sector payroll figures for June, which is more than double the estimates of economists surveyed by the Wall Street Journal. Economists predicted the report would see a 220,000 increase in payroll figures last month. However, the numbers are interesting. Payrolls have increased by 497,000. Let’s look at the details.
Employment report stunned
Today, the Bureau of Labor Statistics (BLS) released its nonfarm payrolls report for last month. Economists polled by the Wall Street Journal estimated the report would increase by 240,000. However, the actual numbers fell short, with 209,000 jobs added in June. Accordingly, there is the smallest increase since 2020.
Softer employment figures likely won’t be enough to change the Federal Reserve’s determination to raise interest rates at the next FOMC meeting. In addition, the rapid rise in wages increases inflationary pressures. The lower numbers did not change market sentiment on whether the Federal Reserve will raise rates by 25 basis points at the end of the month.
What awaits gold prices?
In light of this, gold traded significantly higher. August gold futures were up $15.10, or 0.79%, at $130.50. On the face of it, this could be interpreted as investors actively bidding the precious yellow metal higher. However, this is not entirely true. The dollar tumbled 0.93% and the index fell to 101.91.
Investors have partially discounted gold as gold is paired with the dollar. Also, the weakness of the dollar was overcompensated, responsible for more than 100% of today’s gains in gold futures. Spot gold is currently at $1,924.40 after accounting for today’s $13.60 gain.
Weakness in the dollar is an important factor
However, on closer inspection, the weakness in the dollar added $16.05 to the gold price. Also normal trading resulted in a price drop of $2.45. The dollar appears to be overly sensitive to falling yields on 10-year US Treasuries. Yields today fell to 3,707% from the overnight session high of 4.017%.
The jobs report released today did not have a strong impact on the likelihood of a rate hike by the Fed at its FOMC meeting on July 26. cryptocoin.com Looking at it as a whole, according to CME’s FedWatch tool, the probability of the Fed increasing rates by 25 basis points is 92.4%. The probability of a rate hike was 91.8% yesterday and 86.8% a week ago.
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