The Gold prices are dropping at an alarming rate, adding to a weekly loss after a stronger than expected United States jobs market increased the interest rate of U.S. this year. The U.S. nonfarm payrolls had jumped by 222,000 jobs in the last month itself beating the expectations of a 179,000 gains.
“We have a stellar U.S. jobs number,” said Naeem Aslam, chief market analyst at Think Markets. “The data has brought negative news for gold traders as there isn’t really anything in this number which is going to put the brakes on an interest rate hike.”
The spot gold dropped to 1.2 percent at $1,209.90 an ounce weakest since the month of March. It has also dropped about 2.5 percent this week, and is all set for its biggest weekly fall since the month of May. For August, U.S. gold has settled to 1.1 percent at $1,209.70. In the month of June, gold has shed about 6 percent about $1,295.97. Something to worry for isn’t it!
It seems that dollar-denomination bullion has typically lost value when the greenback and interest rate escalated as it didn’t pay the required interest. “Gold crumpled past May lows, unable to survive a dual assault from a strong payrolls headline and silver plunging through 2016 lows,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets. “Recent hawkish central bank rhetoric led by a likely rate hike from the Bank of Canada next week has offset mild inflation data and geopolitical concern, may see gold test $1,200 short term.”
With gold, silver also fell to 3.2 percent to $15.49 per ounce and Palladium fell to 0.4 percent to $837.75 per ounce.