Gold’s Decline Stopped By Bulls On Monday

Last week’s strong US jobs report has sent warnings across financial markets that the Fed policymakers could reconsider their upcoming action.

Gold price decline is generally stopped on Monday as bulls who entered the market at last Friday’s low of around $1860 and reclaimed $1870. The US Nonfarm Payrolls report and markets repricing further interest rate hikes increased demand for the US dollar, a headwind for the precious metal.

At the time of writing, the Gold Index (XAU/USD) is trading at $1865.50 versus the previous closing price at $1864.61. Gold is obviously pressured by expectations for a hawkish Fed and the stronger US dollar. Wall Street continued to stumble after the US Department of Labour revealed that the US economy added more than 500K jobs to the economy, while the unemployment rate dropped to a 53-and-a-half-year low level of 3.4%.

That reignited the spark that the US Federal Reserve (Fed) might need to raise rates, above the market’s expectations, with traders foreseeing a rate cut in the second half of 2023.

World Interest Rate Probabilities (WIRP) suggest that 50 bps are priced in for the next couple of meetings, while chances stand at 90% for the June meeting. That would take the Federal Funds target to the 5%-5.25% range, aligned with FOMC’s December dot plots.