Gold Tumbles As ADP Data Strengthens Bets on U.S. Rate Hike Next Week
Mar, 09th 08:41
Gold fell to the lowest in five weeks on Thursday as the dollar held on gains versus most of its peers after a strong hiring data from payroll processor Automatic Data Processing overnight which helped raise the bets on a Federal Reserve rate hike next week.
Gold traded below $1205.00 an ounce in early European trade – the level not seen since early February on the back of the greenback rallying after Payroll processor ADP reported that the U.S. private sector added 298,000 jobs in February. The result was well above forecasts for an increase of 190,000 and also the largest increase in private sector hiring since March 2006. Furthermore, January’s figure was revised up to show an increase of 261,000 jobs from the previous report of 246,000.
Markets were waiting for government employment report for February due on Friday. A strong reading would cement speculations of a rate increase at the Fed’s March 14-15 meeting and spur the dollar higher. A stronger currency tends to make dollar-nominated assets like gold less affordable for buyers holding other currencies while higher rate causes gold less appealing as the precious metal offers no yield.
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