International gold prices continued their decline during European trading on the 10th, briefly falling below $4,200 per ounce and erasing all gains accumulated since the start of this year. As of 17:15 Beijing time on the 10th, COMEX August gold futures traded at $4,188.70 per ounce, down 2.28%. Strong U.S. non-farm payroll data released last Friday exceeded market expectations, signaling resilience in the labor market and prompting traders to price in higher odds of Federal Reserve rate hikes later this year amid inflation risks from Middle East conflicts. At current prices, gold has declined 3.51% year-to-date.
Gold Futures Break $4,200 Barrier During European Session
Following losses during the Asian trading session on the 10th, gold prices extended their decline into European hours. The metal briefly breached the $4,200 per ounce threshold during intraday trading. COMEX August-delivery gold futures settled at $4,188.70 per ounce as of 17:15 Beijing time on the 10th, marking a 2.28% decline for the session. The current price level represents a cumulative year-to-date loss of 3.51%, wiping out all gains recorded since the beginning of this year.
Strong U.S. Jobs Data Shifts Market Expectations Toward Fed Rate Hikes
Analysts attribute the gold sell-off to robust U.S. employment figures published last Friday, which significantly surpassed market forecasts and demonstrated underlying strength in the labor market. Facing upside inflation risks stemming from Middle East conflicts, market participants have increasingly positioned for a Federal Reserve policy pivot toward rate hikes in the second half of the year. According to the CME FedWatch Tool, markets currently assign close to a 70% probability that the Federal Reserve will implement at least a 25-basis-point rate increase by the end of this year. A Fed rate hike cycle would diminish the appeal of non-yielding assets such as gold.
FAQ
What happened to international gold prices on the 10th?
International gold prices fell below $4,200 per ounce during European trading on the 10th. COMEX August gold futures traded at $4,188.70 per ounce as of 17:15 Beijing time on the 10th, down 2.28% for the session, erasing all year-to-date gains with a cumulative decline of 3.51%.
Why did gold prices decline sharply on the 10th?
The decline followed the release of U.S. non-farm payroll data last Friday, which substantially exceeded market expectations and indicated resilience in the U.S. labor market. This data release, combined with inflation concerns from Middle East conflicts, led market participants to increase bets on Federal Reserve rate hikes later this year, reducing demand for non-yielding assets like gold.
What is the market's expectation for Federal Reserve policy by year-end?
According to the CME FedWatch Tool, markets currently price in close to a 70% probability that the Federal Reserve will raise interest rates by at least 25 basis points by the end of this year. A shift to rate hikes would reduce the attractiveness of gold and other non-yielding assets.
