Commerzbank analysts highlight a weakening Gold market, with prices briefly slipping below USD 4,000 per troy ounce before recovering. They note that strong US data and hawkish Federal Reserve (Fed) rhetoric are sustaining expectations of tighter policy, though a slowdown in US job creation next week could ease rate concerns and at least stabilize Gold’s recent downward trend.

US data and Fed expectations

"The gold market is also weakening: for the first time since early November, the price for one troy ounce of gold slipped below USD 4,000. A key drag is speculation about interest rate hikes by the US Federal Reserve."

"However, the US data published yesterday showed that the environment for the yellow precious metal is likely to remain challenging. The Fed’s preferred measure of inflation (based on private consumption) rose in May as expected to just above 4%, its highest level in three years."

"It can therefore be assumed that growth will remain robust, which is likely to keep market expectations of a tightening of US monetary policy alive."

"However, we assume that the US labour market report next Friday will merely be solid. A slowdown in job creation is likely to dampen interest rate concerns. This should at least bring the slide in the gold market to a halt."

"In the gold market, by contrast, interest rate concerns could ease if job creation in the US slows. This should at least halt the downward trend in gold prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)