Gold prices have continued to decline following a strong US Nonfarm Payrolls report and a pause in gold purchases by China. The US Bureau of Labor Statistics (BLS) reported that the labor market added 272,000 jobs in May, significantly exceeding expectations of 185,000. This robust job growth has led to speculation that the Federal Reserve may delay any interest rate cuts, as indicated by Fed Chair Jerome Powell's recent comments on January 30, 2025, where he emphasized a cautious approach to easing monetary policy while monitoring inflation trends. Consequently, the US Dollar strengthened, and US Treasury bond yields rose, further pressuring gold prices. The 10-year bond yield climbed 14 basis points to 4.43% following the jobs report, which has diminished gold's appeal as a safe-haven asset. [63b35e99]
In addition to the US economic data, China's central bank has paused its 18-month bullion buying spree, which has significantly impacted gold prices. The People's Bank of China (PBOC) reported that its gold reserves remained unchanged at 72.80 million troy ounces at the end of May, despite the value of these reserves increasing to $170.96 billion from $167.96 billion in April. This halt in purchases has contributed to a decline in gold prices, which dropped 4.5% to under $2,300 after the hot nonfarm payrolls data was released. [d6b43c52]
Market analysts are now closely watching upcoming US inflation data and the Federal Reserve's monetary policy meeting, as these factors will likely influence gold's trajectory. The recent selloff in gold and silver, with gold falling almost 3.5% and silver nearly 7%, is viewed by some as a temporary dip, presenting a potential buying opportunity for investors looking to capitalize on precious metals. [5918f01c] Furthermore, despite the current decline, strategists maintain that gold's safe-haven appeal remains strong among central banks and retail investors, as uncertainties in the global economy continue to loom. [0345f472]