Gold has posted sharp losses gains in the Monday session. In North American trade, the spot price for one ounce of gold is $1187.14, down 1.38% on the day. U.S banks are closed for Columbus Day and there are no U.S events on the schedule.
Nonfarm payrolls for September may have missed its target, but the Federal Reserve remains on track to raise interest rates in December, with the CME Group pegging a December hike at 76%. The anticipation of further rate hikes in December and throughout 2019 has boosted the yield on U.S treasury bills, while at the same time weighing heavily on gold prices. On Friday, 10-year treasury bonds climbed to their highest level since 2011, and if yields continue to climb during the week, gold’s downward spiral could continue.
In the U.S, the labor market remains hot, but September’s numbers were mixed. Nonfarm payrolls dropped sharply to 134 thousand, its smallest gain in a year. This was well short of the estimate of 185 thousand. However, one factor in the disappointing release is Hurricane Florence, which led to many employees being unable to report to work during the storm. Wages appear headed in the right direction – Average Hourly Earnings gained 0.3% in September, and are up 2.9% on a year-to-year basis. The unemployment rate fell to 3.7%, its lowest level since 1969. The mixed numbers put a slight damper on the odds of a December hike, which dipped to 76% after the job releases, down from 80% prior to the releases. A December rate hike would be the fourth this year, with the Fed expected to raise rates another three times in 2019.
