gold had to give up on Thursday yesterday. Gold moved from its highest level in nearly five months after stronger data on the US labor market and services sector pushed the US dollar up as well as investor expectations that the Fed could start talking about scaling back its ultra-loose monetary policy.
The fact that initial jobless claims in the US fell below 400,000 last week, according to the ADP labor market report, while private sector employers accelerated hiring in May, is seen as a sign of a strong labor market recovery.
At the same time, an index that measures activity in the US service sector rose to a record high in May. The economy appears to have overcome the worst, as improving economic data would show, analysts said. Inflation could complicate the situation, but once the turnaround seems to have been made, it was said.
The US dollar index rose sharply on Thursday, making gold more expensive to hold in other currencies, and bond yields rose slightly as well. The gold price had last stabilized at USD 1,900 an ounce after the yellow metal was sought as a safe haven. In addition, there were rising consumer prices and the risks of an inconsistent economic recovery.
Traders will now be closely examining the US government’s May Labor Market report, which will be released today. They are looking for signs that the labor market remains strong and that growth is driving inflation up, which could lead governments and central banks to cut their stimulus programs.
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