The dollar has been given a second wind on the back of the latest non-farm payrolls which came in at 280,000 in May. This was well ahead of the 226,000 expected by the market.
It has been a great week for US jobs reports, as the ADP, jobless and now the non-farm payrolls report all exceeded analysts’ estimates. Other economic indicators out of the US recently haven’t been too impressive, but today’s report has jolted the greenback higher. There was growing speculation that the Federal Reserve would not raise rates until 2016, but today’s number is evidence that an interest rate hike this year can’t be ruled out.
Gold is feeling the pressure of a strong dollar, and the impressive jobs number is a signal that the US central bank is looking to move away from near-zero rates within the next year. Gold is losing its edge as it is non-interest bearing, and the healthier the US economy is the more it will suffer.
Wall Street and the US 500 both were pushed lower by the prospect of interest rate rise this year, but the move is relatively small in comparison with the collapse in gold and the surge in the dollar.