US employment, soaring interest rates can't shake gold as traders flock to USD

Data current as of 4/5/2024

Key points

• Nonfarm Payrolls hit 303k in March: (0:46)
• US Unemployment Rate lower than expected at 3.8%: (1:48)
• US Treasury yields near year-to-date highs: (3:26)
• Gold price trades comfortably above $2,300: (4:33)
• US dollar trading near highs in several forex pairs: (6:11)

Nonfarm Payrolls hit 303k in March

The US labor market demonstrated significant strength in March, with Nonfarm Payroll figures reaching an impressive 303k, far above the predicted 200k. This performance, the strongest in 10 months after revisions, reflects a robust and growing job market. Such data is crucial for traders as it provides insights into economic health and can influence currency and market movements.

US Unemployment Rate lower than expected at 3.8%

Consistent with the robust Nonfarm number, the US Unemployment Rate dipped to 3.8%, outperforming forecasts of 3.9%. This lower-than-expected rate suggests a tighter labor market and potentially increased consumer spending power. After last month's higher-than expected reading, this reversion back is an even greater surprise as the effects of high interest rates have yet to dampen US employment.

US Treasury yields near year-to-date highs

Intraday friday, US 10YR Treasury yields are trading close to their peak levels since November 2023. These higher prices for the benchmark US interest rate reflects sentiment that the Fed Funds rate controlled by the US central bank may remain above 5% for months to come. High yields can attract foreign investors, potentially strengthening the US dollar.

Gold price trades comfortably above $2,300

Following the release of March's employment figures, gold futures fell slightly before reversing again - showing no regard for surging interest rates. Traditionally, gold ,as a non-interest-bearing asset, tends to move inversely to rates like the 10-year yield. However, on this recent run, gold has shown little correlation to any other asset as it continues through all-time highs above $2,300.

US dollar trading near highs in several forex pairs

The US dollar is performing strongly, rising immediately after the employment release. There was a slight pullback mid-day but the dollar continues to trade within about 100 pips of its year-to-date highs against several major currencies, including the EUR, GBP, CHF, and JPY.

How to trade US dollar

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex broker like IG. Many traders watch major forex pairs like GBP/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like IG’s YouTube channel. Our curated playlists can help you stay up to date on current markets and understanding key terms. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.