AtlantisFX | The Gold price has made its weekly gains on Friday after good US labor market data. Although the market still expects the Fed to cut interest rates at the end of July. But the expectations for further interest rate cuts in the further course of the year were reduced. This dampens the prospect of cheap central bank money and weighs on the price of the non-yielding precious metal.
The Gold Future for delivery in August fell by 1.74 percent to $ 1796.15 per troy ounce by 17:09 Central European time. At the daily low of $ 1,388, there was nothing left of his weekly winnings. In the days before, yellow metal rose to $ 1,439 a troy ounce, its highest level since May 2013, pending a major round of easing by central banks around the world.
The likelihood of a large rate cut at the end of July and further interest rate cuts later in the year declined after the US economy created more jobs than expected. 224,000 new jobs were posted in June. Economists interviewed by Investing.com had expected a job increase of 165,000, after 75,000 in May.
"The market is now likely to correct its excessive interest rate cut expectations for July," Nordea Markets writes. Finally, Powell said last week that monetary policy should not overreact to individual data points or short-term mood swings. "However, we still expect a rate cut of 25 basis points in July."
After the strong data from the US labor market finally jumped back to the US yields. Ten-year US interest-rate paper rose 5.3 percent to 2.058 percent, while yields on 2-year US Treasuries surged more than 6 percent.
Higher yields also benefited the US dollar. The US dollar index, which compares the greenback against six other currencies, gained 0.70 percent, flirting the 97-point round. As the gold price is in dollars, a strong greenback usually means a falling gold price - and vice versa.
Viewed on technical charts, the price of gold has failed to hit the high of $ 1,438, and this could now be considered a double top by some precious metal traders. The downside, it is now the support in the form of the lows of July 1 at $ 1,384 to defend, otherwise threatens a decline to $ 1,355.
On the upside, on the other hand, the most recent multi-year high of $ 1,438 should be withdrawn from the market in order to continue the upward trend.