Gold's price collapsed after the release of strong NFP data last Friday:
Meanwhile, the S&P 500 continues to hit record highs:
According to the Chief Market Strategist of the World Gold Council, John Reade, the resumption of the strengthening of the US dollar and the growth of bond yields represent gold's serious obstacles. It will be difficult for gold to find its footing while the US stock markets break through the daily record highs.
In addition, investors of precious metals should pay attention to the stock markets. As long as the S&P 500 is strong, there will be no large influx into gold.
Following the report of the US Labor Department last Friday that 943,000 jobs were created in July, and this figure significantly exceeded expectations when 870,000 jobs were assumed, US stock markets reached a new record high. At the same time, the unemployment rate declined to 5.4% compared to the June figures of 5.9%. Wages also rose more than expected in July.
The latest US employment data not only confirm the confident recovery of the US economy but, according to some economists, will also prompt the Fed to outline its plan to reduce bond purchases by the beginning of 2022.
John Reade said that he was not surprised that gold prices declined on Friday on the wave of the comprehensive strength of the labor market in the current conditions. According to him, investors should continue to focus on the long-term potential of gold and added that the rates are very low, and even after the Fed raises rates, they will still remain low due to the balance of huge government debt.
He also suspects the global economy to facing weaker economic growth and higher inflation in the future, creating a favorable environment for gold.
