Gold remains pressured. In the view of strategists at Commerzbank, strong Nonfarm Payrolls report released on Friday has exacerbated the yellow metal’s downside potential.
Further US Fed rate hikes are likely
“Gold is being kept in check by the firm US dollar and rising bond yields. Yields on ten-year US Treasuries are currently above the 3% mark again. This has caused real interest rates to rise again too, making gold unattractive as a non-interest-bearing alternative investment.”
“Gold has found itself under pressure since last Friday, probably thanks in part to the robust US labour market. This is because 390K new jobs were created in the US in May, more than expected.”
“Since demand for labour remains unchanged at a high level, there is still a risk of a wage-price spiral, so we believe that further US Fed rate hikes are likely.”