Gold prices decline on stronger US employment, China trade talks
What's the story
Gold prices fell on Monday as optimism over easing US-China trade tensions weighed on safe-haven demand.
The decline was also influenced by a stronger-than-expected US jobs report, which tempered expectations of interest rate cuts by the Federal Reserve.
Spot gold dropped 0.4% to $3,298.12 per ounce while US gold futures fell 0.9% to $3,317.40 per ounce.
Trade negotiations
US-China trade talks today
Three senior aides of US President Donald Trump are scheduled to meet their Chinese counterparts in London today.
The meeting is aimed at resolving the ongoing trade dispute between the two largest economies, a situation that has kept global markets on edge.
Kelvin Wong, a senior market analyst at OANDA, said "short-term traders do not want to take aggressive long positions right now ahead of the outcome of US-China talks."
Employment report
Stronger-than-expected US jobs report
The US economy added 139,000 jobs in May, beating analysts' expectations. The unemployment rate remained unchanged at 4.2%, according to the Labor Department.
The stronger-than-expected employment figures have reduced the immediate need for a rate cut by the Federal Reserve, typically a move that supports gold prices.
The market focus is now shifting toward US-China trade talks. Positive outcomes from these trade discussions could further weigh on gold in the short term.
Explanation
How US economy affects gold prices
Strong employment figures signal a healthy economy, reducing the likelihood of an interest rate cut by the Federal Reserve.
Without rate cuts, gold becomes less attractive to investors, as higher interest rates increase the opportunity cost of holding non-yielding assets like gold and support a stronger dollar.
As a result, one of the usual triggers for gold price gains—expectation of monetary easing—is missing. This dynamic puts downward pressure on gold prices in the near term, despite broader market uncertainties.