The gold price is under further pressure today after being hammered over the last week and as we mentioned yesterday, any sustained break down through the $1,250 level may see a further decline to around $1,200.
The catalyst for this may the release of the nonfarm payrolls figure, unemployment rate and hourly earnings numbers from the US.
The hourly earnings figures will be of particular importance as the Non-Farm payrolls and unemployment rate have satisfied the fed for quite some time.
Last month we saw a reading of 0 percent and today the number expected by analysts is 0.3 percent and if they are correct or the number comes in on the upside gold may take real hit as this will clear the way for the Fed to once again raise rates at the start of next year.
The more the Fed raises rates the worse it is for gold as it is a Non-interest bearing investment and investors would rather hold US dollars as the return rises on the back of rate hikes.
“A rate hike is now looming and people are suddenly realizing that gold may not be the most attractive long position at the moment,” said David Govett, head of precious metals trading at Marex Spectron in London”
“People’s memories are short and their pockets not so deep.” He added.
If we see disappointing job figures out of the US today this may halt golds slide until at least next week when the interest rate decision is announced.