The prices of gold increased slightly on Monday because of weak U.S. employment growth in August. The data confirmed expectations that interest rates will remain low for a longer time. It also raised concerns over the recovery of the American economy from the impact of the COVID-19 pandemic. The bullion’s advance was checked by the greenback that held steady against a basket of rival currencies.
Spot gold is currently trading at $1,931.67 per ounce as of 0826 GMT.
The U.S. economy added only 1.4 million jobs in August. It is lower compared to 1.7 million in July and 4.8 million in June. There was a slight improvement in the unemployment rate, but the total number of jobs is still more than 11 million below the pre-pandemic level. Federal Reserve Chairman Powell considered the jobs report as “good,” but acknowledged that the economy would need more support for a longer time because of the pandemic.
AxiCorp’s chief market strategist Stephen Innes noted that the weak payroll gains indicate that the recovery of the U.S. economy continues to slow down, and this favors the yellow metal.
Meanwhile, the market will be monitoring the monetary policy meeting of the European Central Bank scheduled on Thursday.
In physical trading, the retail demand for the bullion improved slightly last week because of lower domestic practices and the celebration of the Pitru Paksha festival. But the activity in other top Asian markets remained muted.
On the technical front, Reuters’ technical analyst Wang Tao predicted that spot gold prices might go up back to $1,949 per ounce since it has cleared the resistance price level at $1.936.
In a related development, the U.S. Commodity Futures Trading Commission reported last Friday that market speculators lifted their bullish stance in COMEX gold contracts for the week that ended on September 1.