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Gold eases below June 17 high as USD firms after weak jobs data
The market reaction to July’s unexpected 23K job loss was short-lived, but persistent Fed-hike pricing and Middle East risk continued to keep pressure on gold.
Gold prices eased in early trading, retreating from their highest level since June 17 as the US Dollar firmed. FXStreet linked the move to the US Nonfarm Payrolls release, which showed the economy unexpectedly lost 23K jobs in July, and revised the prior month down to 20K from 57K, adding to concerns about a cooling labor market.
FXStreet said the initial boost to gold from any labor-market disappointment was tempered by ongoing geopolitical uncertainty. It noted that risks around the Middle East, including conditions discussed by Iran for reopening the Strait of Hormuz, helped support the safe-haven US currency even as the geopolitical risk premium remained in play.
The piece also highlighted cross-asset spillovers, saying the US-Iran standoff can act as a tailwind for crude oil and that investors worry higher energy costs could reignite inflation pressures. FXStreet added that the CME Group FedWatch Tool suggests traders continue to price a higher chance of a year-end rate increase, which supports elevated Treasury yields and the USD, typically weighing on gold.
Looking ahead, FXStreet said traders may wait for upcoming US inflation data, citing TD Securities expectations for core and headline CPI of 0.20% month over month and 0.15% month over month, respectively. It argued that results could shift expectations for additional hikes, with the broader recent rise in rates driven by Fed expectations leaving room for rates to move lower if hikes are priced out.
Latest closeGold $4,292.00 ▲1.1%|WTI crude $78.07 ▲3.8%