The U.S. labor market sent gold prices plummeting: what to expect from the Fed
10 June 14:58
On Monday, global gold prices fell to a two-month low. This was due to U.S. employment data, which reinforced expectations of a rate hike by the Federal Reserve (Fed).
According to Reuters , as reported by "Komersant Ukrainian".
The publication notes that the spot price of gold fell by 0.9% to $4,290.66 per ounce, the lowest level since March 23 of this year.
Impact of U.S. Economic Data
U.S. economic indicators, particularly in the employment sector, have influenced investor expectations regarding a potential Fed rate hike.
Gold, traditionally considered a hedge against inflation, comes under pressure when interest rates rise.
This is because higher rates increase the opportunity cost of holding gold for large investors, forcing them to seek more profitable assets.
At the same time, a new exchange of military strikes between Israel and Iran triggered a sharp rise in oil prices.
“We bounced off our recent lows only thanks to news that a new ceasefire may have been reached between Iran and Israel. So that took some pressure off the decline,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
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Oil prices jumped by more than $4, further fueling global fears of accelerating inflation. Geopolitical tensions in the Middle East continue to fuel commodity markets, which could affect prices in the future as well.
“Further guidance for investors will come from new data on the U.S. Consumer Price Index for May, as well as the upcoming report on producer prices. If hotter inflation figures or a hawkish forecast from the Fed’s Open Market Committee emerge, the price of gold could test the next psychologically important support level at $4,000 per ounce,” the publication writes.
Trends in other precious metals
Amid falling gold prices, other precious metals also showed negative trends.
In particular, the spot price of silver fell by 1.2% to $66.98 per ounce. Platinum lost about 1.1% of its value, dropping to $1,757.53, while palladium fell by 0.5%, reaching $1,219.61.
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