FX.co ★ XAU/USD, GOLD
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XAU/USD, GOLD
Gold prices (XAU/USD) experienced a downturn in early Asian trading on Monday, attracting sellers and reaching around the $3,320 level. This gradual decline in the precious metals value can be primarily attributed to the implications of the stronger-than-expected U.S. non-farm payrolls (NFP) report for June, which has significantly altered the Federal Reserves monetary policy outlook. Traders are now keenly awaiting the release of the Federal Open Market Committee (FOMC) meeting minutes later on Wednesday, hoping for further clarity and potential support for gold. The June U.S. non-farm payrolls data surpassed market expectations, with payrolls increasing by 147,000, up from the revised 139,000 in May. Concurrently, the unemployment rate held steady at a low 4.1% in June. These robust employment figures point to a continued resilience in the U.S. labor market, effectively reducing the perceived urgency for the Federal Reserve to implement near-term monetary easing, such as interest rate cuts. A stronger U.S. economy, as indicated by these jobs numbers, allows the Fed more room to maintain a tighter monetary policy, which, in turn, supports the U.S. dollar. A stronger dollar typically exerts selling pressure on non-yielding assets like gold, as it makes gold more expensive for holders of other currencies and reduces its appeal as a safe haven against currency devaluation. The CME FedWatch tool, for instance, showed a substantial shift in rate cut probabilities, with the likelihood of a July reduction plummeting to less than 5% after the NFP report.