All last week, gold has been trading in a narrow range near the current level 1212.00 dollars per ounce. Investors evaluate the possibility of interest rates in the US being raised in June. So, the president of the Federal Reserve Bank of Dallas Robert Kaplan repeated on Thursday that the rate increase is possible in case the economic growth this year is about 2%, and also subject to further decline of unemployment and signs that the inflation is approaching the target level of 2%.
Today the attention of the financial markets will be focused on the publication at 14:30 (GMT 2) of data on the state of the US labor market. Employment data in May are likely to be slightly weaker than in April. Economists interviewed by Wall Street Journal expect the number of payrolls to have increased by 158 000 in May, and the unemployment rate to have remained at 5%. According to other information, the growth of non-farm payrolls in the US totaled 160,000 in May, and the unemployment rate fell to the level of 4.9%, while hourly earnings rose by 0.2%. These weaker-than-expected data may cause the closure of long positions on the dollar, which will support the gold and vice versa.
In connection with the publication of NFPR data one should pay attention to the ADP data published yesterday, which showed that the number of initial unemployment insurance claims fell for the third consecutive week in the United States and reached its low in more than a month. Also we have seen increase in the number of jobs in the US private sector by 173,000 in May, which is slightly better than the forecast of economists.
Confirmation of employment forecast will strengthen the dollar on the foreign exchange market. The probability of interest rate in the US being raised in June will increase in this case.
Gold prices usually fall amid higher rates, since gold does not bring interest income and becomes less attractive compared to higher-yielding assets. The cost of borrowing on its acquisition and storage is increasing. In this case the investment attractiveness of the dollar increases.