Gold loses drifted away from its seven week high hit earlier this week. Gold futures settled lower on Wednesday—kicking their typically inverse relationship to a weaker dollar—as sentiment remained cautious following a recent rally on top of expectations that the Federal Reserve could further tighten interest rates going forward.
Gold prices on Thursday lowered, as the dollar firmed on expectations that the U.S. Federal Reserve could trim its bond holdings in September.
As markets await the data to be released on Friday, a snapshot of the examination of the jobs markets revealed that private-sector hiring remained strong in July as employers added 178,000 jobs, slightly more than expected.
In the Friday report, the U.S. is expected to have added 180,000 jobs last month, Gold loses keeping unemployment near a 16-year low of 4.4%, according to a Market Watch survey. The pace of hiring in the U.S. has already slowed sharply since hitting a post-recession peak of 250,000 a month in 2015, but continues to churn ahead, so far showing few red flags for wage-induced inflation.
The U.S. economy will likely be strong enough for the Fed to trim its bond holdings in September.
Gold and the U.S. currency unit typically move inversely as a cheaper dollar is beneficial to gold investors using another currency. Both markets are affected by interest-rate policy Gold loses as higher rates support the dollar but also dull the appeal of non-yielding gold in favor of interest-bearing assets.
Inflation has been contained even though the labor market appears to be in its best shape in many years and despite double-digit U.S. earnings growth in the second quarter. Reduced rate rise expectations tend to weaken the dollar, making dollar-priced gold cheaper for non-U.S. investors.
The dollar steadied above a 2-1/2-year low versus the euro hit in the previous session, but was still looking wobbly due to doubts about whether there will be another U.S. interest rate rise this year.