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Gold price fallen by about $ 25, updating August lowa, move caused by a sharp strengthening of the US currency in response to the strong data on the US labor market.
The Labor Department said that employment in the US rose more than expected in July, which should support expectations of faster economic growth and increase the chance of the Fed raising interest rates this year. According to the data, the number of people employed in non-agricultural sector increased in July by 255 000 people, after rising 292,000 by the end of June. The unemployment rate remained unchanged at 4.9 percent, as more people entered the labor market. Economists had forecast that the number of people employed will increase by 180,000 in July and the unemployment rate will drop to 4.8 percent. Strong job growth should strengthen the Fed's confidence in the labor market, which officials see as at or near full employment. Fed Chair Yellen stated that the economy needs to create a little less than 100 000 jobs a month to keep up with population growth.
Futures on interest rates suggest that the market is now pricing in a 18% probability of a rate hike in September (from 9% yesturday) and 47% in December (last probability was 32%).
Deutsche Bank analyst Michael Xue said that investors will now control the movement of real return on 10-year US bonds, against which gold look overpriced. The Deutsche Bank expects that this year the Fed will increase interest rates once.
Physical gold sales in Asia remained sluggish this week, but the appetite is expected to increase with the approach to the festive season in India and China.
In addition, it became known that the gold reserves in the largest investment fund SPDR Gold Trust rose on Thursday to 0.37 percent, to 973.21 tonnes.
The cost of the August gold futures on COMEX fell to $ 1335.80 per ounce.
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