U.S. Labor Market Data Hit Gold Prices

Gold prices fell in both local and global markets on Thursday, impacted by stronger-than-expected U.S. labor data that reinforced expectations of continued monetary tightening by the Federal Reserve, according to a report by the "iSagha" gold trading platform.

In the local market, gold prices dropped by EGP 35 during the day compared to Wednesday’s closing levels. The price of 21-karat gold reached EGP 4,640 per gram. On the global front, spot gold fell by $30 to settle at $3,328 per ounce.

The price of 24-karat gold stood at EGP 5,303, 18-karat gold at EGP 3,977, 14-karat gold at EGP 3,094, and the gold pound (8 grams of 21K) at EGP 37,120.

On Wednesday, local gold prices had increased by EGP 35, with the 21-karat gram opening at EGP 4,640 and closing at EGP 4,675. Simultaneously, the global ounce price rose by $25, moving from $3,338 to $3,358.

The current retreat in gold prices, both locally and globally, comes amid challenges facing the market due to the continued strength of the U.S. labor market. The latest job data has strengthened bets on the Fed maintaining its tight monetary policy stance.

According to data from the U.S. Department of Labor, Nonfarm Payrolls (NFP) increased by 147,000 jobs in June, exceeding the market forecast of 110,000. Additionally, May’s figure was revised up to 144,000.

The unemployment rate dropped slightly to 4.1% from 4.2%, and the labor force participation rate slipped to 62.3% from 62.4%. Meanwhile, annual wage growth slowed to 3.7% from 3.8% in May, falling short of analysts' expectations of 3.9%.

Regarding jobless claims, initial unemployment benefit claims came in at 233,000, below expectations of 240,000. The four-week moving average came in at 241,500, while continuing claims remained steady at 1.964 million, slightly above forecasts.

These figures suggest a moderate cooling in the U.S. labor market, with employment still holding at healthy levels and wage growth softening slightly. This could provide the Federal Reserve with more flexibility to consider interest rate cuts in the coming period, especially as inflation pressures ease — a development that directly impacts gold, which is highly sensitive to interest rates and the strength of the U.S. dollar.