New York, New York – The U.S. labor market, which has surprised many experts with its strength throughout 2024, seems to be showing signs of a slowdown as five months of consistent growth come to a halt.
In April, the U.S. economy added 175,000 jobs, falling short of the 238,000 jobs that economists had predicted. Alongside this, the unemployment rate rose, and wages did not increase as much as anticipated.
Initially, this news boosted the gold market, causing prices to briefly rise. However, amidst a bearish market sentiment, many traders took the opportunity to sell, leading to a 1% decline in gold prices by the end of the week. Despite holding above $2,300 per ounce, the market is facing a period of consolidation and downward trend.
The Federal Reserve’s recent decision to keep interest rates unchanged showed that they are not planning to begin any easing cycle in the near future. This stance, combined with the cooling labor market, is expected to limit gold’s upward potential in the short term.
While gold prices may see further declines as the Fed maintains its tight monetary policy, analysts believe that a complete collapse in the market is unlikely. Federal Reserve Chair Powell’s statements during a press conference indicated that the central bank is not considering raising interest rates at this time.
Additionally, the factors that previously drove gold prices to record highs remain in play, with central banks continuing to show strong interest in purchasing gold. The latest report from the World Gold Council revealed that central banks bought a record 290 tonnes of gold in the first quarter of the year.
Looking ahead, major banks like Goldman Sachs are optimistic about gold’s prospects, dismissing the current correction and predicting prices to rally to $2,700 by the end of the year. This positive outlook is driven by increasing demand from emerging market central banks and Asian retail investors.
As the week comes to a close, it will be interesting to see how gold prices continue to evolve amidst shifting market dynamics and central bank actions.