NEW YORK (Dispatches) - Gold prices registered a two-day gain of 2.5% and soared to above $ 1,830 mark on Monday as fears surrounding tapering Fed stimulus cooled. A much lower-than-expected U.S. nonfarm payrolls print sent the DXY U.S. Dollar index to a ten-week low, buoying precious metal prices.
Friday’s report showed that nonfarm jobs increased 266,000 in April, a far cry from market expectations of a 978k rise. March’s figures was revised down to 770k from 916k, underscoring a shortage in labor supply. This suggests that the job market may take longer to fully recover from the pandemic, and thus more time is needed for the Fed to consider tapering stimulus measures.
Meanwhile, a weaker jobs report also strengthened the prospect of fiscal spending. President Joe Biden said on Friday that his massive infrastructure and family support bills are "needed now more than ever” as job growth slowed in April. Earlier this year, Mr. Biden proposed a US$ 2.3 trillion infrastructure bill to revamp the nation’s transportation infrastructure and create millions of jobs.
The 10-year U.S. treasury yield stabilized at around 1.59% after registering a "V-shaped” rebound on Friday. Gold prices are sensitive to yield changes. Therefore, reflation hopes may drive yields higher if Biden’s fiscal stimulus plan is approved, potentially derailing gold’s upward trajectory.