Gold retreated on Monday, following a holiday-shortened trading week that saw equities picking up speed with the Dow topping the 17,000 mark on the heels of better-than-expected jobs report from the United States.
The bullion sentiment came under pressure this morning as traders porbably revisited and further dissected Friday's very poisitive employment report, which showed US employers added 288,000 jobs in June, well above the 215,000 expected by economists. The unemployment rate unexpectedly fell to 6.1% to from 6.35 a month earlier. As of 04:01 a.m. ET:
- Spot Gold fell 0.47% to $1,314.28 an ounce, following last week's gain taht saw the precious metal rising as high as $1,333.47.
- Spot Silver fell 0.85% to $20.98 an ounce
Equities rallied in the past three months as investors anticiapted a rebound in the economy, and Thursday's news seems to have proved the jobs recovery is adding traction.
- Dow Jones Industrial Average rose 92.02 poinrs or 0.54% to 17,068
- Standard & Poor's 600 rose 10.82 points or 0.55% to 1,985.44
June's upbeat employment report helped the bullion market offset concerns among investors about the hearlth of the economy, after US Gross Domestic Product shrank at a seasonaly adjusted annural rate of 2.9% in tyhe first quarter, the fastest rate of decline since the recession.
Gold recieved a very strong boost on 19th June after the Fed said that interest rates would remain low "for some time". Tension in Iraq and Ukraine also boosted the metal's safe-haven appeal.
However, the strong jobs data fueled specuatlion that the Federal Reserve might call for an earlier-than-expected hike in US interest rates, which will probably weigh on the bullion sentiment in the near term.
The dollar remained firm against a six-currency basket on the heels of the strong jobs data, pulling the precious metal lower with the start of the week. Meanwhile, the USDIX eased around 80.24 after rising as high as 80.35 earlier in the session.
A stronger US dollar reduces the appeal of dollar-denominated commodities, such as gold as an investment appeal.