Oil Price Drop Boosts Gold Ahead of NFP Report
The gold market is experiencing a slight rebound ahead of the US non-farm payrolls (NFP) report, but this isn't due to investor caution about the data. Instead, crude oil prices have dropped due to France's proposal for a coordinated release of 100 million barrels of crude oil and fuels by European countries and International Energy Agency members.
The plan involves supplying 50 million barrels of diesel by European nations and 50 million barrels of crude oil by other IEA member countries. This move is in response to growing pressure from Washington, where the US administration is struggling with high fuel prices on the domestic market ahead of the midterm elections.
A drop in energy commodity prices could lower inflation expectations over a longer perspective, creating a more favorable environment for precious metals right before the release of the September NFP report. However, bond yields in the US are currently extremely overheated, and the labor market is moving into a mode of distinctly lower new job creation.