Anticipations are high that the jobs data released by the U.S. Department of Labor will demonstrate the economy is continuing its upward drive. The world's reserve currency, which typically performs the inverse of the precious metal, notched its top value thus far this week on Thursday against a basket of 10 competing currencies. Markets in the U.S. are scheduled to be closed on Friday when the nation observes Independence Day.
Economists and analysts polled by the news service stated June payrolls climbed by 215,000 workers after having pushed up 217,000 during the month prior.
"With managed longs in gold having risen sharply last week, there is a risk of gold coming under strong pressure" if Thursday's jobs data is better than expected, states a Thursday report authored by analyst Abhishek Chinchalkar with AnandRathi Commodities Ltd., according to Bloomberg. "We expect gold to face strong headwinds in sustaining gains beyond $1,330."
Thus far this year, the yellowish metal has surged nearly 10 percent. Propelling the commodity's value one year after suffering annual losses for the first time since 2000 is activity by the U.S. Federal Reserve, which has said it plans to leave borrowing costs low.
The Fed also is tapering monthly asset purchases, which reduces the number of dollars in the market. Now standing at $35 million, the amount of debt purchases per month has fallen from $85 million as the Fed views the economy has strengthened and benefited from its stimulus program. The body is aiming to end the program by the end of this year, with the view focusing on an October closure.
Gold drops as ECB meets
In addition to dropping in advance of U.S. employment data, gold futures also lost value as policy makers with the European Central Bank convened a meeting, according to Reuters.
Any decision that the ECB makes will serve as an indicator as to the strength of the global economy and whether or not stimulus measures implemented by those outfits have served their purpose.
But the real focus of the Thursday trade session is the jobs data and what it says about the temperature of the nation.
"The dollar gained some strength on the back of yesterday's data, which is not supportive for gold but unless there is a significant surprise in the U.S. nonfarm payrolls, we don't see gold collapsing," analyst Bernard Dahdah with Natixis told Reuters on Thursday. "Prices should come under pressure below $1,300 in the longer term, as the U.S. economy gets gradually better and investors find fewer reasons to put their money into safe assets like gold."
Coming off even performance
The Wall Street Journal reports the price of gold was hovering during the Wednesday trade session.
Two ongoing conflicts were impacting the yellowish metal. Fighting in Ukraine between government security forces and pro-Russian separatists prompted the precious metal to come into increased demand. The uprising in Iraq of Sunni Islamic militants against the Iraqi government also prompted stronger demand for gold.
Yet even during the earlier part of this trade week, investors focused their attention on the all-important labor market data that the U.S. is poised to releases.
The jobs data is considered a key cog that serves as a litmus test as to the strength of the U.S. economy. For that reason, analysts and economists hold high regard for the data that is reflected by the jobs data.
"Gold is a little bit expensive at these levels, and a blockbuster jobs number would certainly slow the rally down," principal James Cordier with Liberty Trading told The Wall Street Journal on Thursday.
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