Gold Down As Investors Digest Positive U.S. Employment Data

Gold was down on Friday morning in Asia, hovering near two-week lows and set to record its worst week in three months. Positive U.S. employment data buoyed the dollar and bond yields, and investors remained concerned about a potential pullback of stimulus measures.

Gold futures inched down 0.07% to $1,871.90 by 11:38 PM ET (3:38 AM GMT), remaining below the $1,900 mark. The dollar, which usually moves inversely to gold, inched up on Friday and the benchmark 10-year U.S. Treasury yield rose to 1.63%.

The U.S. recorded 385,000 initial jobless claims in the past week, lower than the 390,000 claims in forecasts prepared by and the 405,000 claims filed during the previous week. The number of claims fell for a fifth consecutive week to a record low of 400,000, a level not seen since the start of the COVID-19 pandemic.

Meanwhile, U.S. private employers increased hiring in May, with the ADP non-farm employment change rising to 978,000. The decreasing number of COVID-19 cases allowed businesses to re-open and boosted demand.

Investors now await further employment data, including non-farm payrolls data for May, due later in the day. The data could provide further clues on the economic outlook and the U.S. Federal Reserve’s next policy move.

Investors also remained concerned about a slowdown in the Fed’s stimulus measures, prompted by prospective runaway inflation. However, some Fed officials reiterated that the price pressure will be temporary, and the central bank will keep its current stimulus measures unchanged for a while.

New York Fed President John Williams said on Thursday that the U.S. economic recovery from COVID-19 is not strong enough for Fed to start to scale back its support for businesses, but added it makes sense to start talking about a tapering of stimulus measures. This follows Philadelphia fed President Patrick Harker’s comments of “slowly, carefully” moving back on purchases at a suitable time a day earlier.

In other precious metals, silver and palladium edged down 0.2% and platinum fell 0.4%.

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