Gold under pressure ahead of US jobs data

Gold prices fell in European trade on Friday, extending losses for the second straight session and heading for the second weekly loss in a row as geopolitical concerns in the Middle East dissipate, while the Fed is becoming less likely to cut interest rates this year.

Now traders await important US payrolls data later today, crucial for gauging the health of the economy and the path ahead for monetary policies. 

The Fed asserted at its last meeting this week that changes in policies will depend on inflation and labor conditions. 

Prices 

Gold prices fell 0.3% to $2297 an ounce, with a session-high at $2308, after losing 0.7% on Thursday, resuming losses after a short hiatus yesterday, and moving closer to a four-week trough at $2281. 

Weekly Trades

Gold prices are still down 1.75% this week on track for the second weekly loss in a row.

The Fed 

The Federal Reserve announced its decision to maintain interest rates unchanged between 5.25% and 5.5% for the sixth straight meeting.

The Fed’s policy statement indicates it doesn’t expect to perform any rate cuts until there’s enough confidence that inflation is moving sustainably towards 2%.

Powell

Fed Chair Jerome Powell said in his press conference on Wednesday that the Fed expects policies to remain restrictive for sometime in order for inflation to hit the 2% target. 

He added that he doesn’t expect the next policy step to be a rate hike, however he doesn’t expect a rate cut until inflation is reliably heading towards 2%. 

He asserted that inflation readings so far this year weren’t encouraging, and it could take longer than expected. 

US Rates

According to the Fedwatch tool, the pricing for a Fed interest rate cut in June is standing at 14%, while the pricing for such a cut in July stood at 35%. 

Investors now barely price in just a single rate cut this year. 

US Payrolls

The US government will release the crucial US payrolls report later today, expected to show the addition of 238 thousand new jobs in April, slowing down from 303 thousand in March. 

Unemployment claims are expected to remain at 3.8%, while average hourly earnings are estimated to have risen by 0.3%. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 1.44 tonnes yesterday to a total of 829.60 tonnes, the lowest since April 17.