PRESS ROOM
Bumper US payrolls data resets market’s expectations for the Fed
Tuesday 09th July '19
Surprisingly strong US labour market data released on Friday last week cast doubts on the Federal Reserve (Fed) being as dovish as the market had hoped. That took the cheer out of equity markets, while 10 year US Treasury yields - which had dipped below 1.95% on Thursday 4th July – rose back to over 2%. The US Dollar basket appreciated close to 0.5% intraday on Friday 5th July. That had taken the edge off gold, which declined from close to US$1420/oz in the middle of last week to just under US$1400/oz by the end of the week. With geopolitical risks remaining elevated, we suspect the downside risk to gold from the market’s re-assessment of the Fed’s policy course will be limited. Iran’s violation of the nuclear accord, constant threats of trade discussions derailing and further instability in Turkey’s institutions (following the dismissal of the country’s central bank governor) are keeping the demand for the historical safe-haven metal high.