"Strong Non-Farm Payrolls" dispels expectations of a significant rate cut by the Federal Reserve, causing the gold price to fall from record highs
Better-than-expected US employment data led traders to lower their expectations for a Fed rate cut, causing the price of gold to fall from a record high to $2,643 per ounce. Although the price of gold is still close to the high of $2,685.58 at the end of last month, the market expects the next rate hike to be no more than 25 basis points. Gold has risen by about 28% this year, supported by rate cut expectations and safe-haven demand. Fund managers have reduced their net long positions in gold to a three-week low, indicating a trend of profit-taking
According to the Zhitong Finance and Economics APP, as the US employment data came in stronger than expected, traders have lowered their expectations for a rate cut by the Federal Reserve, leading to a decline in the price of gold.
Data shows that the price of gold is close to $2,643 per ounce, still near the record high of $2,685.58 touched at the end of last month. Last Friday, the US employment data saw a significant increase, weakening the possibility of a substantial rate cut by the Fed in November, with the key US Treasury bond yields rising to 4%. The market currently expects that the rate hike next month will not exceed 25 basis points.
Lower interest rates are generally seen as favorable for non-interest-bearing assets like gold. The US inflation data to be released later this week may provide further clues on the interest rate trend.
Since the beginning of this year, gold has risen by about 28%, hitting a series of historical highs, with the recent increase benefiting from the optimism surrounding rate cuts. Strong purchases by major central banks and safe-haven demand amid ongoing conflicts in Russia, Ukraine, and the Middle East have also supported the price of gold.
Meanwhile, data released by the US Commodity Futures Trading Commission last Friday showed that as of October 1st, fund managers reduced their net long positions in gold to a three-week low.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in a report: "Gold and silver saw net selling as traders took profits in both metals after recent price gains. In the case of gold, it is worth noting that as geopolitical concerns escalated recently, long-term holders continued to profit, resulting in reductions in both long and short positions."
In other data, the US Dollar Index remained stable, while the yield on the US 10-year Treasury bond rose. Palladium prices rose, while platinum and silver prices fell