Early on Monday, gold prices are on the rise on the back of a disappointing employment report which brought back worries about the pace of economic recovery in the US and weakened the US dollar. At the time of writing, GOLD is trading a little above $1,814.
Last Friday, the US employment report showed a smaller than expected increase in jobs across the country, raising concerns of a slowdown in the labor market that could potentially impede recovery in the world’s largest economy following the coronavirus crisis. The disappointing figure sent the US dollar lower after it had touched a two-month high over the past few sessions, helping boost gold prices.
The weaker jobs report also supported the safe haven appeal of gold as it further highlighted the weakness caused to the US economy by the coronavirus pandemic, which remains ongoing despite the rollout of vaccines. Key sectors of the economy, manufacturing and construction, suffered the most severe job losses.
Prices were also climbing higher on the back of improvement in demand for physical gold among consumers in China and India. The upcoming Lunar New Year holiday in China has spurred sales of gold while Indian retail consumers spent more on gold after its domestic rates slid lower.
Gains in gold, however, remain limited on account of a strengthening in the 10-year US Treasury yields, which have soared close to a one-year high. Higher tresury yields raise the opportunity cost of holding bullion, exerting downward pressure on its safe haven appeal.