The price went down due to the May American job report stronger than expected, strengthening the possibility that the Federal Reserve (Fed) held the interest rate high in longer duration. Fear of inflation is rising globally, due to Middle Eastern warfare.
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- The world's gold was steep in session 5/6. Plot: Kitco*
According to the U.S. Department of Labor Statistics, the country created 172,000 new jobs in May. This figure doubles the predictions of analysts in Reuters' survey, and is also higher than the preliminary figures of April.
"News out of the question. As the war continues and inflation pressure and energy prices remain high, Fed is unlikely to be able to reduce interest rates. The price of gold therefore remained under pressure", Bart Melek - Director of Global Transportation at TD Securities remarked.
U.S. government bonds interest also accelerated after the job report. This development increased the chances of holding a tool that was not as profitable as gold.
Since the Middle East War broke out late February, gold prices have dropped almost 20%. Conflicts caused the price of crude oil to rise and raise concerns about inflation, interest rates increasing.
Although gold is a traditional tool of prevention of inflation, high interest rates tend to exert pressure on precious metals. Markets predicted the Fed's ability to raise interest in December is 72%. Before the job report was released, the ratio was only 50%.
Besides gold, other precious metals also lost their price. Silver dropped over 8% of $60,000 a ounce. Palladium and the clarinet are over 6%. Held for the week, all three were discounted.
Local Thu * (in Reuters, Kitcoweg