Gold Prices Snap Three Week Winning Streak as Strong NFPs Fuel USD

New York (Aug 6)  Gold prices snapped a three week winning streak with the precious metal down 0.93% to trade at 1257 ahead of the New York close on Friday. The reversal off seven-week highs comes on the back of a strong U.S. employment report with the greenback rallying sharply into the close of the week. 

Non-Farm Payrolls topped expectations with a print of 209K for the month of July as the unemployment rate down-ticked to 4.3%. The gains were accompanied by an increase in the labor force participation rate- a welcomed development for the Federal Reserve. While the data does little to shift interest rate expectations (markets still pricing 50/50 chance of a December rate-hike), the release was just the catalyst needed to fuel a rebound in the greenback which has been under tremendous pressure over the past few weeks. 

Looking ahead to next week, traders will be eyeing U.S. inflation data with the release of the July Consumer Price Index (CPI) slated for Friday. With employment more-or-less at the Fed’s ‘natural rate’ the focus has been on the inflation outlook and if the data tops estimates, interest rate expectations could further fuel the late-week USD rally. For gold, the dollar advance has been enough to cap the rally near-term with prices pulling back into support ahead of the weekly close. While the broader outlook remains constructive, we’ll be looking for a break of the monthly opening range to offer further guidance of our near-term bias.

DailyFX