Mumbai, 8 Jun (Commoditiescontrol): Gold prices tumbled on Friday following a stronger-than-expected U.S. jobs report, which dampened hopes for U.S. interest rate cuts this year. Adding to the bearish sentiment was data revealing that top consumer China refrained from bullion purchases in May. Spot gold dropped around 3% to $2,304.54 per ounce, while U.S. gold futures fell 2.8% to settle at $2,325 per ounce. This marked gold's third consecutive weekly decline, with a nearly 1% loss for the week.
The decline in gold prices also dragged other precious metals down. Silver plunged 6.6% to $29.25 per ounce, platinum decreased by over 3.6% to $967.05, and palladium fell 2.2% to $909.06 per ounce.
The Labor Department's report revealed that Nonfarm Payrolls (NFP) surged by 272,000 jobs in May, significantly surpassing the anticipated increase of 185,000. This robust jobs data fueled a rally in the dollar, making gold more expensive for foreign buyers and further pressuring bullion prices.
As a result of the jobs report, traders adjusted their expectations, now pricing in 37 basis points (bps) of rate cuts by the end of December, down from 48 bps before the NFP data. The likelihood of the first rate cut has shifted to November from the previously expected September.
The strong U.S. economic data and the potential delay in rate cuts have prompted liquidation in the gold market and other metals. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
Moreover, bearish sentiment was reinforced by reports that China paused its gold purchases in May, breaking an 18-month streak of consecutive buying. This decision by the world’s largest bullion consumer added to the downward pressure on gold prices.
(By Commoditiescontrol Bureau: 09820130172)
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