The gold price is steady today in the Asian trading session after Friday’s losses on the back of better than expected data from the US that all but seals the deal for rate hike from the US Federal Reserve this month.
The unemployment rate in the US dropped to an 18-year low of 3.8 percent while the Nonfarm payrolls figured surged by 223,000 jobs which saw gold sharply sold off, but buyers were quickly back into the market which stemmed the precious metal from further losses.
“Great job numbers, lower unemployment rate, increased labor participation rate and ISM [were] all putting more pressure on gold,” but the decline tapered off by late morning Friday, said Jeff Wright, executive vice president at GoldMining Inc.
Until this month’s rate hike, gold may fail to make any significant gains, but once this is out of the way the recent pressure put on the precious metal by US monetary policy may fade and help boost the price again.
Once the rate hike is out of the way, the market will be focusing on the next and potentially last move before the Fed stops for a while. We also think that the rate picture may have run its course as well, at least for now,” said INTL FCStone analyst Edward Meir
“As time moves on, there’ll be less and less reasons to get into the U.S. dollar, which is a very powerful fuel for the gold complex. “ he added.
Another factor that may support the gold price is its familiar appeal as a safe haven as the political turmoil taking place in Italy comes to a head, with some saying the market may be underestimating the size and complexity of the problem.
"There is an anti-establishment vote taking place. Taxpayers [in Italy] are fed up with socialist government bureaucrats and there's a pushback against them, just like the British did against the unelected E.U. ministers dictating what polices are for the Brits," said Frank Holmes, CEO of U.S. Global Investors.
"There is a rebellion taking place, and that is good for gold," he added.