Gold prices fell almost 1% on Monday against a strengthening dollar as investors reacted positively to US job data released on Friday showing annual wage growth.
Average hourly earnings rose by 0.3%, a year-on-year increase of 2.5%.
A stonger dollar usually results in gold price drops as its purchasing power is dimnished. Despite this, gold remained strong as expectations for a Federal interest rate increase In June remained low.
Gold prices have risen around 20% over 2016 as investors hedge their bets against plunging oil prices and a generally uncertain economic outlook.
The current price is $1,281.95 (£891.35) per ounce as of 8:20 AM GMT. Here’s what that looks like:
Daniel Hynes of ANZ in Sydeny told Reuters that although gold was “well-supported,” people responded better to the job data than initially thought.
“Investors certainly saw the payroll numbers being a positive in terms of no rate hike in the shorter term, which lessened the blow of that stronger currency,” he said.
Meanwhile, a Capital Economics Research note, cited in the same article, predicted a gold rebound was likely:
“We still expect the price of gold to rise further, underpinned by demand for inflation hedges as inflationary pressures continue to build,” it said.