Gold prices slid to a certain extent today after the release of better-than-expected initial jobless claims data in the US.
This decline comes after a short period of stabilization as traders considered the potential developments in monetary policy expectations and turned their attention to the successive US job market data releases this week.
While weaker-than-expected data pulled bond yields to the downside yesterday, today’s stronger-than-expected job figures could fuel more uncertainty and add to the selling pressure on gold.
Caution could dominate the market ahead of the NFP report release tomorrow, which could fuel some volatility as traders adjust their views on monetary policy.
The gold market could remain on a downtrend overall and recorded a significant decline from its peak this year.
The strength of the dollar during the last few months could continue to weigh on its performance while the Federal Reserve could leave its interest rates elevated for a longer period of time.
Strong bond yields, which could remain at current levels for a long period, have also rendered gold less attractive to investors.
Over the longer term, however, strong central bank gold purchases could provide some support while interest rates could potentially start declining during the second half of next year, providing some relief to gold prices.