Gold (XAU/USD) prices surged following the release of the US non-farm payrolls report, which unveiled a weaker-than-expected rise in job numbers. Currently trading at $1,926.65, spot gold reached a daily high of $1,935.04, erasing the previous session’s losses.
The US economy experienced its slowest job growth in two and a half years during June. However, strong wage growth suggests a tight labor market, reaffirming that the Federal Reserve will resume interest rate hikes later this month.
The Labor Department’s employment report also revealed a reduction of 110,000 jobs created in April and May. This decline indicates that businesses may be reconsidering expanding their workforce due to higher borrowing costs.
By raising interest rates, the opportunity cost of holding gold increases, making alternative investments such as the U.S. dollar and U.S. debt more appealing to investors. As a result, this will continue to impact gold negatively.
Technically, the yellow metal remains rangebound, and a break above $1,935 could trigger another leg higher. Conversely, a break and a close below $1,900 will certainly open the floodgates to the downside.
