Gold posts biggest drop in two months on strong US employment; stocks plunge and oil set for weekly gain
Gold prices fell by the most in two months after US employment data came in stronger than expected. US stocks plunged on the same news, while oil is on course to record a gain this week.
US employment data came in stronger than expected. Following the release, market price movements reflected the possibility of additional rate hikes by the Federal Reserve. Several asset classes moved sharply at the same time.
Gold recorded its biggest decline in two months. After the employment data came in strong, gold reacted sensitively to changes in the dollar and bond yields. Volatility increased in the gold and bond markets.
US stocks fell sharply overall. As expectations for rate hikes increased following the strong employment data, declines emerged in growth stocks and across a broad range of sectors. Share-price movements reflected a short-term reassessment of economic conditions and interest rates.
Treasury yields rose. Bond prices moved lower as the interest-rate outlook changed. In the bond market, there were signs of a reassessment of the short-term interest-rate path.
Oil prices are expected to finish higher this week. The energy market has become increasingly likely to record a weekly gain. Oil-related assets shifted to a positive weekly trend as demand and market sentiment changed.
The direct trigger for this move was employment data. Investors used the released employment data as an opportunity to reassess the interest-rate path and asset allocation. The Federal Reserve’s upcoming schedule and additional economic data will be key variables for volatility.