Gold prices had plunged to the $3,300 area, that’s the lowest in value for the money on a 3rd day in a row. On Monday, the precious metal reached a one-week low. This decrease was a result of the market’s reaction to an unexpectedly strong jobs report from the US. This report has dampened hopes for near-term interest rate cuts by the Federal Reserve. Usually, cuts like these make non-interesting assets such as gold more appealing.
This month’s employment numbers have spooked investors. They point to a strong opportunity for the Fed to continue with their current monetary policy and not pursue cuts of any kind that would raise gold prices. Moreover, the jobs report painted a picture of a strong labor market, further denting gold’s allure as an investment refuge.
In the context of recent months, Gold’s downward trend has been extreme. Traders were looking for a rebound in prices on the view that monetary policy would be softer. That recent data turned sentiment, triggering a new wave of gold selling pressure.
“Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress.” – FXStreet and the author
Almost everyone agrees that America’s job market is still doing ok. This newfound confidence in economic growth may be what drives gold prices lower still. In short, investors should brace for a volatile ride in the gold market. They’re going to have to increasingly assess the future implications of high chapter-11 signs and different financial indicators.