- The price of gold plans around $ 3,310 in the first Asian session on Monday.
- The US non -agricultural payrolls (NFP) increased by 139,000 in May, more than expected; The unemployment rate remained stable at 4.2%.
- Commercial conversations between the US and China will be the culminating point later on Monday.
The price of gold (Xau/USD) is quoted in a flat note about $ 3,310 during the first Asian session on Monday. The rebound in the US dollar (USD) could weigh on the precious metal. However, the uncertainty of the tariff policies of US President Donald Trump could help limit gold losses.
The growth of employment in the US stronger than expected in May elevates the dollar and undermines the price of the merchandise called in USD. Non -Agricultural Payroll (NFP) in the United States (USA) increased by 139,000 in May compared to the increase of 147,000 (reviewed since 177,000) in April, revealed the US labor statistics bureau of US statistics (BLS) on Friday. This reading exceeded the market consensus of 130,000.
The US unemployment rate remained stable at 4.2% in May, while average time athlers were kept unchanged in 3.9% in the same informed period. Both readings were stronger than expected by the market.
After the optimistic US employment report, federal funds aimed at a greater possibility that the US Federal Reserve (FED) maintains its reference interest rate without changes in their next two monetary policy meetings.
Investors will closely follow the commercial conversations between the US and China later on Monday, since Trump said that the two largest economies in the world will carry out commercial conversations in London. Any sign of a commercial war in escalation between the US and China could boost safe refuge flows, benefiting the yellow metal.
FAQS GOLD
Gold has played a fundamental role in the history of mankind, since it has been widely used as a deposit of value and a half of exchange. At present, apart from its brightness and use for jewelry, precious metal is considered an active refuge, which means that it is considered a good investment in turbulent times. Gold is also considered a coverage against inflation and depreciation of currencies, since it does not depend on any specific issuer or government.
Central banks are the greatest gold holders. In their objective of supporting their currencies in turbulent times, central banks tend to diversify their reserves and buy gold to improve the perception of strength of the economy and currency. High gold reserves can be a source of trust for the solvency of a country. Central banks added 1,136 tons of gold worth 70,000 million to their reservations in 2022, according to data from the World Gold Council. It is the largest annual purchase since there are records. The central banks of emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has a reverse correlation with the US dollar and US Treasury bonds, which are the main reserve and shelter assets. When the dollar depreciates, the price of gold tends to rise, which allows investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rebound in the stock market tends to weaken the price of gold, while mass sales in higher risk markets tend to favor precious metal.
The price of gold can move due to a wide range of factors. Geopolitical instability or fear of a deep recession can cause the price of gold to rise rapidly due to its condition of active refuge. As an asset without yield, the price of gold tends to rise when interest rates lower, while the money increases to the yellow metal. Even so, most movements depend on how the US dollar (USD) behaves, since the asset is quoted in dollars (Xau/USD). A strong dollar tends to keep the price of gold controlled, while a weakest dollar probably thrusts gold prices.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
