Gold price drops as US NFP data beats estimates
Gold price (XAU/USD) falls below $2,630 in North American trading hours on Friday after the release of the United States (US) Nonfarm Payrolls (NFP) data for November.
The precious metal drops as the labor market report showed that the number of fresh workers hired was higher than expected. The report showed that the economy added 227K fresh workers, higher than estimates of 200K. The Unemployment Rate accelerated to 4.2%, as expected.
Broadly in-line growth in the labor market has boosted expectations for the Federal Reserve (Fed) to cut interest rates again in December. The probability for the Fed to cut interest rates by 25 basis points (bps) to 4.25%-4.50% this month has increased to 87% from 71%, recorded on December 5, according to the CME FedWatch tool.
The impact of the US labor market data on the Fed's likely interest rate action in the policy meeting on December 18 is expected to be significant. Fed officials became more focused on preserving labor demand when the central bank started reducing its key borrowing rates in September.
Meanwhile, the US Average Hourly Earnings data rose steadily by 4% and 0.4% on monthly and annual basis, respectively. Economists expected a slight slowdown in the wage growth measure.
After the US NFP data, the initial reaction from the US Dollar Index (DXY) was bearish. Later, it gauges cushion near 105.50 and rebounds to near 105.75. Meanwhile, 10-year US Treasury yields slump to near 4.13%.
Source: FXstreet
