Gold Prices Surge Above $4,200 Amid Concerns Over US Labor Market
Gold prices surged above $4,200 per ounce on August 5 amid concerns about the US labor market and service sector. The latest report from the Institute of Supply Management showed that the service sector purchasing managers' index in July reached 54.1 points, nearly unchanged compared to June but lower than the market's forecast of 54.5 points.
The index is still above the 50-point mark, indicating that service activities continue to expand. However, the lower-than-expected growth has raised concerns about the momentum of the US economy.
Other data also suggested a cooling down in labor demand. The number of vacancies in June decreased from 7.54 million to 7.36 million, and the US private sector only created about 44,000 jobs in July.
The weakening of the recruitment index is considered an important signal for the prospects of the labor market and the interest rate policy of the US Federal Reserve (Fed). The expectation of less rigid interest rates has dragged US 10-year government bond yields down to near the 4.6% range, supporting demand for precious metals.
The weakening USD also makes gold cheaper for buyers using other currencies. Additionally, a decrease in oil prices compared to the previous tense period helped reduce concerns about energy inflationary pressure.