Gold prices have fell to the lowest level of three weeks, fell over 2.5 %on Friday after increasing the fears that the US employment data stronger than expected could continue to increase the interest rates of Federal Reserve. Analysts interpret the market and share their predictions.
The US increase in employment broke record, gold fell hard
Spot gold closed Friday at $ 1,864.66 with a decrease of 2.51 %. The US gold futures decreased by 2.8 %to $ 1,876.6. This week, Gold has fallen 2.5 %so far, and in two sessions, about $ 100 losses have lost its biggest weekly decline since the beginning of October.
The US increase in employment, 517,000 positions, almost twice the increase in December, was added sharply in January. The unemployment rate fell to 3.4 %, the lowest level of 54 years. This constantly points to a strict labor market. “These data will add support to the argument that the FED may need to remain a little more aggressive forward.“
Gold price and DXY graph“That’s why gold takes a break!”
Meanwhile, the dollar index (DXY) increased by 1.1 %and reached the highest level of three weeks. This made the gold into a less attractive bet. The return of 10 -year Treasury bonds has also increased. Kriptokoin.comAs you followed, at the beginning of this week, the Fed made a quarter -point interest rate increase after one -year bigger increases. In addition, FED President Jerome Powell warned that monetary policy will be further tightening. Bart Melek, Head of the TD Securities Commodity Markets Strategy Strategy, makes the following assessment:
As long as employment and other data continue to be intact in the USA, I think we should start waiting for the US central bank to be cautious.
Traders’ bets on the 25 -basin interest rate hike at the Fed’s March meeting rose after the data on Friday. Kinesis Money Analyst Carlo Alberto de Casa makes the following comment:
The recovered dollar is pulling the ingot down. A new catalyst is needed for more rally. That’s why gold is a break.
“Breaking below this level is important for gold prices”
According to the Ministry of Finance, the Russians bought a record number of gold ingots in 2022. Because tax cuts applied to precious metals encouraged people to stock a safe port. Yeap Jun Rong, a market analyst in Ig, makes the following comment:
With gold prices exhibiting more than 20 %spectacular performance in the last three months, some positions for softer interest rate hike bets may have already been activated. In addition, the last FOMC meeting may have found the verification that is more needed. It is highly likely to get some profit in the near term. However, for gold prices, a greater belief for sellers may be a breaking below the $ 1,895, where foot buyers stepped into this week just before the meeting.
“The positive surprise in labor data hit a blow under a positive surprise”
The number of new jobs created in January increased by 517,000 and the biggest increase of six months. The increase was much stronger than the 187,000 estimation of the economists who participated in the survey by The Wall Street Journal. The government said on Friday, the unemployment rate decreased from 3.5 %to 3.4 %to the lowest level of 54 years, he said. Gold Newsletter Editor Brien Lundin says that the positive surprise in the number of work is a powerful indicator showing that the Fed has more than one interest rate hike in the hands of the FED. In addition, the analyst makes the following statement:
Yellow Metal has been improving more harshly than stocks because it has been performing better than stocks for the last few months. The profits were taken by those who enjoyed that journey.
“The FED decision encouraged the wave of profit”
For now, the FED has the authority to raise interest rates of the Federal Open Market Committee for now. While rising interest rates create a burden on gold, high returns in bonds raise the opportunity cost of keeping assets that do not provide return such as gold.
The three major decisions taken by the Central Banks this week caused rise from 2 %to the top to the top of the dollar in the last two sessions. “The FED decision announced on Wednesday, the Yellow Metal encouraged a wave of profit under the extreme purchase zone in the future, T said Tyler Richey, the assistant editor of Sevens Report Research.
