Gold finishes lower on strong US jobs report

The gold price finished the week lower on Friday on the back of another round of strong job numbers from the US which all but guarantees another rate hike from the US Federal reserve this month

Data out from the Bureau of Labor Statistics in America showed that 201,000 jobs were created in August which was well above analysts expectations for a figure of 191,000 while the unemployment rate held at 3.9 percent and shows the US economy is nearing full employment.

The news sparked more demand for the US dollar at the expense of gold as by investors seeking higher yields which the greenback will be able to provide as rates move higher.

With such strong employment figures, gold may come under further pressure against the US dollar as further rate hike this year remain a real possibility.

“We remain cautious on gold over the rest of the year, with the Fed on pace to meet its planned rate increases supporting a stronger U.S. dollar,” said Rob Haworth, senior investment strategist at U.S. Bank.

“Growth outside the U.S. is unlikely to deteriorate into recessions this year, limiting safe haven demand for gold.” He added.

Some analysts however believe that the US dollar rally has almost run its course and it’s hard to see the currency making any significant gains from here, especially when other central banks start to lift interest rates such as the European Central Bank which will bring buyers back in for the Euro.

"I'm struggling to see how the dollar could extend gains from here. Other central banks are becoming hawkish, the pound could come back up and the euro, once the ECB starts tightening. Gold is due for a rally," said Fawad Razaqzada, an analyst from FOREX.com

 


Analyst

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