- Mr. Prithviraj Kothari, MD RSBL
Just when Gold was raising questions on its recent rally, last week’s labour report proved to be a saviour for the yellow metal. Gold prices traded sharply higher in Friday thus giving a technically bullish weekly high close to gold.
In May, the
US non-farm workforce grew up only 38,000, missing the forecast of 160,000 and
indicating that the US recovery may be starting to slow. Additionally, the
March and April figures were revised 22,000 and 37,000 lower respectively while
growth in average hourly earnings last month of 0.2 percent was below the
predicted 0.3 percent. The Labour
Department report released Friday showed employers added jobs in May at the
slowest pace since 2010 as unemployment dropped to 4.7 percent, already
reaching the level Fed officials expected to see by the end of 2016. Apart from
disappointing headline NFP (nonfarm payrolls) number, there is a also a sharp
jump in involuntary part time workers.
A
much-weaker-than-expected U.S. jobs report prompted the yellow metal to surge
higher, and those initial solid gains have been extended to show gold trading
over $30 higher on the day. A sharp drop in the U.S. dollar index also helped
push gold prices higher.
A broad
slowdown is troubling for the Federal Reserve, which has grown increasingly
hawkish in recent weeks following the April meeting minutes, giving their
support to a rise in interest rates as early as this month if data warranted
such a move. But a negative jobs report has once again left the markets
perplexed per se the rate hike.
Considering
the pliability of the US economy, has once again raised some questions about
the momentum of growth and about the outlook. This in turn takes June off the
table for a Fed hike.
Apart from the
current news what needs to be watched this week for gold are:
- THE MAIN EVENT: Fed Chair Janet Yellen's speech today at 10.00 pm.
- Central Bank (Rate Cut) Watch:
- Reserve Bank of Australia (June 7) no change expected
- Reserve Bank of India (June 7) no change expected
- Reserve Bank of New Zealand (June 9) 0.25% rate cut expected
Sentiments
for gold are bullish and the major turning pint for this sentiment is the US
dollar. Gold could remain in rally mode through the coming week as traders
reassess their U.S. dollar and Fed outlook.
Thank You!
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The primary
purpose of this article by Mr. Prithviraj Kothari is to educate the masses of
the current happenings in the Bullion world.
Previous
blog –
"
INTEREST RATE HIKE SPOILING
GOLD PRICE RISE :RSBL" - http://riddisiddhibullionsltd.blogspot.in/2016/05/interest-rate-hike-spoiling-gold-price.html
