Gold price dropped to a 2-month low, move caused by data on the US labor market, which reinforce the arguments in favor of Fed rate hike this year.
The report from Automatic Data Processing (ADP) showed that employment growth in the private sector of the US slowed in August, but were slightly above forecasts of experts. According to the data, the number of employees increased by 177 thousand in comparison with the revised figure for July (194 thousand). Analysts had expected that the number of people employed will increase by 175 thousand.
Market participants are using this data as a benchmark for NFP. Overall, the data from ADP suggest that Friday report could also be strong. According to forecasts, the number of people employed in non-agricultural sectors increased by 180 thousand after increasing by 255 thousand. In July. The unemployment rate is likely to decline to 4.8% from 4.9%. Meanwhile, the growth rate of the average hourly earnings is estimated to have slowed to 0.2% from 0.3%. If expectations are met further increases the likelihood of the Fed raising interest rates this year.
A strong US dollar, as a rule, is putting pressure on gold, as it reduces the metal’s appeal as an safe asset.
In addition, it was reported that in August, the world’s largest gold exchange-traded fund SPDR Gold reserves fell by 2.7 tons to 8 tons after the inflow in July.
The cost of the October futures for gold on the COMEX fell to $ 1307.7 per ounce.