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Gold Price Slipped after the US NFP exceeds Expectations

by Didimax Team

Having fallen quite sharply for a while after the release of the US NFP, the price of gold successfully reduced the decline. Spot gold prices slipped just 0.4% to $1,794.96 an ounce.

This was happened at the close of the market, Saturday (03/December) morning. Gold futures fell only 0.3% to $1,809.6. Meanwhile, the daily XAU/USD chart edged down by 0.29%.

It means that pair came to $1,797.25, still in the range of four-month highs. The United States employment data in general is still solid. The Non Farm Payroll (NFP) there added 263K in November.

That number was higher than expectations. However, the figure is lower than before. The US Unemployment Rate was recorded stable at 3.7%, and Average Hourly Income increased from 0.5% to 0.6%.


The Fed Starts Dovish, Gold Finds Support

All data above were higher than forecast at 0.3%. With stronger-than-expected America’s Employment numbers, what People are seeing is the Fed probably still needs to raise rates at the rate they're already expecting.

It was said by David Meger, An analyst at High Ridge Future. Market participants are going to see pressure on almost all assets today, not just in complex precious metals.

However, a statement from the Fed's President for the Chicago region, Charles Evans, dampened the sharp decline that gold is experiencing. Evans said further about that. 

He stated that there would only be a slight rate hike as the central bank would slowly lower the pace of rate hikes from 75 bps. Evans' statement, in line with Powell's statement.

It was considered dovish, which soared the price of gold. Rising interest rates have hampered this commodity’s traditional status as an inflation hedge this year. 

Bullion also Got a Support 

The reason for the situation above is, it is interpreted as a higher and detrimental increase in the cost of ownership. It is because gold does not provide yields.

Bullion also got a boost from Fed Chairman Jerome Powell's comments earlier this week that it was time to slow rate hikes. November is the month where this commodity experienced a significant gain. 

Then that commodity may carry that momentum into December, illustrates the depth of support that has been built for the metal. It was stated by Kinesis Money as an analyst Rupert Rowling.

Elsewhere, The euro started the European session some days ago (2/December) at a record high in the past five months versus the US dollar around the level of 1.0545. 

EUR/USD Boosted by Powell’s Statement 

The EUR/USD rally gained extra energy from the Fed Chairman's statement and the core PCE index eroding USD interest rate expectations. However, the direction of the next movement will depend on the release of Non-farm Payroll data.

The U.S. dollar plunged sharply in the wake of Fed Chairman Jerome Powell's statement. Powell confirmed the relaxation of tightening monetary policy earlier this week. 

The greenback situation has been further squeezed following the release of some disappointing data yesterday evening. The Core PCE Price Index only grew by 0.2 percent 

That was for Month-over-Month in October 2022. That's a miss the consensus estimate of 0.3 percent, while being much slower than the 0.5 percent growth in September. 

US PMI Score Fell 

The index is the Fed's main reference in considering its interest rate policy, so a slowdown in the Core PCE Price index signals a reduction in the urgency of aggressive rate hikes. 

The results of the Purchasing Managers' Index (PMI) survey further confirmed the pullback in the US employment sector that had previously emerged in the ADP report. 

The Manufacturing PMI in America score fell from 50.2 to the contraction area at 49.0. It is even though consensus only predicted a decline to 49.8.

In fact, consensus only predicts a decline of up to 49.8. The employment component in the report even plummeted from 50.0 to 48.4. Such factors contributed to the pressure on the greenback.



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