Gold Price Forecast: XAU/USD rallied due to low labor force participation – TDS
TD Securities Head of Global Strategy Bart Melek expresses his afterthoughts on the US Nonfarm payrolls data and its impact on gold price.
Key quotes
“Gold rallied despite the US economy adding an impressive 531,000 positions and the unemployment rate dropping to 4.6% in October.”
“The reason for that was the unchanged participation rate, which remained at 61.6%.”
"That essentially means that the labor force participation is still at problematically low levels, and we are nowhere near full employment.”
"This is why markets are not pricing in the probability of Fed's tightening as imminent. Plus, it is doubtful that the strong job growth pace will continue for the next six months or a year."
“With the Fed's somewhat dovish tapering announcement and the jobs data in mind, the anticipated June rate hike is not looking very likely.”
"The Fed will keep monetary policy quite easy for a prolonged period because we are not near full employment. Fed's view is that keeping the economy hot will ultimately trigger the absorption of more people into the labor force. They need to reverse those mass resignations.”
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
