Gold’s Rally Forces Reassessment of Fed Rate Odds
Gold rose after U.S. June payrolls added 57,000 jobs, its first weekly gain in five weeks, prompting investors to cut expectations for further Federal Reserve rate hikes.
Gold rose after U.S. payrolls for June increased by 57,000, a result that was well below forecasts. Spot gold jumped 1.4% on July 3 and was on track for a 2.3% weekly gain.
The weak jobs figure reduced traders’ odds of additional Federal Reserve rate hikes and eased pressure from a stronger dollar and higher yields that had weighed on the metal.
The metal had recorded its worst quarterly loss in 13 years in the three months to June and stood about 22% below its January record high.
Nigel Green, chief executive of Devere Group, said: “I think markets have fundamentally mispriced the Fed’s next move.” He warned investors had spent months expecting persistently high rates, a strong dollar and steady economic resilience.
Green added that if further economic readings soften, investors would reassess the likelihood of another rate increase and adjust expectations for policy over the next 12 to 18 months.
Market participants are watching upcoming economic releases, Federal Reserve comments and trading flows to determine whether the June jobs report marks a turning point or is an isolated weak reading.
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