Gold Prices Fall as U.S. NFP Data Exceeds Expectations
Gold prices dropped below $2,630 during North American trading hours on Friday after the release of U.S. Non-Farm Payroll (NFP) data for November.
The XAU/USD price declined as the labor market report revealed higher-than-expected job creation. The economy added 227,000 jobs, surpassing estimates of 200,000, while the unemployment rate rose to 4.2%, as anticipated.
The strong labor market performance has fueled expectations of another interest rate cut by the Federal Reserve (Fed) in December. According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut to a range of 4.25%-4.50% has jumped to 87%, up from 71% recorded on December 5.
Federal Reserve Policy
The U.S. labor market data is expected to significantly influence the Fed’s decision at its December 18 monetary policy meeting, with policymakers prioritizing labor demand stability since initiating rate cuts in September.
Lower interest rates are generally favorable for gold, as they reduce the opportunity cost of holding the non-yielding asset. Following the NFP data release, the initial reaction of the U.S. Dollar Index (DXY) was bearish.
Meanwhile, silver spot prices edged down 0.3% to $31.26 per ounce but held onto weekly gains of over 2%. Platinum fell 0.4% to $934.70, and palladium rose 0.9% to $972.01. Both platinum and palladium were on track for their second consecutive weekly declines.
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