Gold retreated from the session low, but still continues to trade in the red zone. Support for precious metals have data on the US labor market, which reduced the likelihood that the Fed will be able to raise twice this year, as planned.
Recall, higher interest rates have a downward pressure on the price of gold, which brings its holders to interest income and that is difficult to compete with the assets, bringing that income against the background of increasing interest rates.
The report submitted by the Automatic Data Processing (ADP), showed that employment growth in the US private sector slowed sharply in April, confounding expectations of experts. According to the report, in April, the number of employees increased by 156 thousand. People in comparison to the revised downward the March index at the level of 194 thousand. (Originally reported 200 thousand.). Analysts had expected the number of people employed will increase by 196 thousand. In addition, data showed that in the sectoral section of the number of employees among the goods-producing companies decreased by 11 thousand., While among those who provide services, rose to 166 thousand.
Gradually, investors' attention switched to the Friday employment report non-farm payrolls, a key barometer of the health of the US economy. "A weaker employment report could push gold prices above $ 1,300," - said an analyst at ABN Amro Georgette Boele. It is expected that the number of employees increased by 200 thousand. After increasing by 215 thousand. In April. The unemployment rate is likely to remain at around 5.1%.
In the course of trading is also affected by yesterday's statements by Fed officials. Recall, the Federal Reserve Bank of Atlanta President Lockhart said that an increase in US interest rates is possible in June. Lockhart said that the country's macroeconomic fundamentals look strong, but the data is received before the June meeting of the paint too rosy a picture. According to him, in April, Fed officials did not change rates, but then they did not have data on GDP for the 1st quarter. Meanwhile, the president of the Federal Reserve Bank of San Francisco John Williams said that he considered it possible to increase the Fed's interest rate in the current year, despite the weak data on economic growth in the 1st quarter. According to Williams, the slowdown in GDP growth in the 1st quarter was likely due to seasonal factors, and he would have expressed support for a rate hike this year, when will accelerate in the coming quarters economic growth.
The cost of the June gold futures on the COMEX fell to $ 1283.8 per ounce.