Gold recovers to above $2,500 after release of US job’s data
NEW YORK (September 5)
Gold (XAU/USD) trades back above $2,500 on Thursday after rebounding from the $2,471 previous day’s lows, following the release of lower-than-expected job openings data in July from the US, which stoked fresh hard-landing fears.
Gold price finds its feet after job’s data
Gold recovers after the release of weaker-than-expected US job’s data. This increased safe-haven demand for the yellow metal and implied interest rates could fall faster than previously anticipated in the US – another positive for Gold, as it reduces the opportunity cost of holding the non-interest-paying asset.
US JOLTS Job Openings fell to 7.673 million in July from a downwardly revised 7.910 million in June and below estimates of 8.100 million, according to data from the US Bureau of Labor Statistics on Wednesday.
The data feeds into the fragile US labor market narrative that is driving Federal Reserve (Fed) interest rate expectations after Fed Chairman Jerome Powell sounded the warning on jobs in his speech at the Jackson Hole Symposium last month.
It follows weak US manufacturing data on Tuesday, which triggered a global market flash crash that was further exacerbated by fears about the Artificial Intelligence (AI) tech bubble bursting.
From around 31% before the Manufacturing and JOLTS data, the probability of the Fed cutting interest rates by 0.50% at their September 18 meeting, rather than the standard 0.25%, has risen to 45%.
ADP Employment Change and Jobless Claims follow on Thursday, but the main event on the calendar will be US Nonfarm Payrolls (NFP) on Friday. If NFPs increase less than expected, it would further support the case of the larger rate cut.
Gold may also be rising after the World Gold Council (WGC) published data showing a rise in central bank Gold buying. Central bank Gold reserves in July rose by 37.6 tonnes, from -4.6 tonnes in June, according to data from the WGC report released on Tuesday. Central banks have become a major source of Gold demand in recent years and now account for roughly 18% of the market. The data did, however, also show that the People's Bank of China (PBoC) continued its halt on Gold buying in July after stopping purchases in May.
On the geopolitical front, Reuters reports that US negotiators are preparing another ceasefire deal in Gaza whilst the war in Ukraine continues unabated.
FXStreet
