Gold has shown some downward movement on Monday, but is unchanged on the day. In the North American session, spot gold is trading at $121.09 per ounce. Earlier in the day, gold prices dropped to a low of $1204, the metal’s lowest level since mid-March. On the release front, there are no major events on the schedule.
Gold had a rough week, dropping 2.4 percent. The metal lost ground on Friday, as Nonfarm Payrolls rebounded in June, climbing to 222 thousand. This easily beat the estimate of 175 thousand and marked a 4-month high. At the same time, employment data was not all positive, as wage growth wage growth was unchanged at 0.2%, shy of the forecast of 0.3%. Weak wage growth has remained soft throughout the first half of 2017, despite a tight labor market. With wages remaining stagnant, inflation is also mired at low levels. The Fed has consistently said that it plans to raise interest rates for a third and final time in December. Last month, Fed Chair Janet Yellen shrugged off inflation worries, saying that she expected inflation was mired at lows levels due to temporary factors. However, the markets don’t seem to be buying in, as the odds of a December hike have dropped to just 47%, according to the CME Group. The US economy slowed down in the first quarter, and there are signs that Q2 will also be soft. Consumer spending, which comprises two-thirds of US economic growth, remains soft. Another sore point in the economy is inflation, which remains below the Fed’s target of 2%. If the economy doesn’t show signs of stronger growth and higher inflation, the Fed might change its tune about a December rate, which would be good news for slumping gold prices.
