Gold shines bright as weak labor data and dollar losses fuel investor demand
Gold prices soared in today’s trading session, marking a strong comeback from recent lows, as the US dollar stumbled and jobless claims surged beyond expectations. The June gold futures contract jumped nearly 1%, adding over $30 to settle close to key resistance levels.
Dollar Weakness Boosts Gold’s Appeal
The US Dollar Index (DXY) dropped by 0.6%, its sharpest fall in recent sessions, as economic worries gripped the market. A weakening greenback tends to boost gold demand since the precious metal becomes cheaper for foreign buyers.
Investors reacted to soft economic data and legal uncertainties surrounding US trade tariffs, although analysts suggest the primary market driver was dollar weakness, not geopolitical headlines. A federal court ruling questioning the legality of certain emergency tariffs has added fuel to investor uncertainty, though steel and aluminum tariffs remain untouched.
Spike in Jobless Claims Sparks Fed Speculation
More critically, the US Labor Department reported that initial jobless claims rose to 240,000 last week—well above forecasts of 230,000 and higher than the prior week’s 226,000. The unexpected rise in unemployment filings is raising fresh doubts about the strength of the labor market recovery.
This data has intensified speculation about potential Federal Reserve interest rate cuts. If the Fed lowers rates, it would further reduce the opportunity cost of holding non-yielding assets like gold, encouraging inflows into the precious metal.
Fed Under Pressure, But Policy Change Still Unlikely
Despite growing calls for rate relief, Federal Reserve Chair Jerome Powell remains firm on the central bank’s data-driven policy stance. In response to recent political pressure and a meeting with President Trump, Powell emphasized the Fed’s independence and commitment to avoid politically motivated decisions.
“I can’t imagine myself ever requesting a meeting with the president,” Powell noted, reinforcing that the Fed will only act based on sustained economic shifts—not isolated data points.
Market tools such as the CME FedWatch show just a 5.6% chance of a rate cut in the June 18 FOMC meeting, suggesting that traders do not expect immediate monetary easing despite the gloomy data.
Outlook: Gold Eyes Further Gains on Safe-Haven Demand
With inflation concerns rising and economic data turning mixed, gold’s safe-haven status is once again in the spotlight. As long as the dollar remains under pressure and labor market signals stay soft, gold may continue its upward momentum toward the $2,400 mark.
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