08.08.2016 - Gold fell sharply due to strong data on the US labor market
The price of gold showed a decrease against the publication of statistics on the labor market in the US, according to which the number of jobs outside the agricultural sector increased by 255 thousand against the forecast of growth by 180 thousand. In addition, the average hourly wage increased by 0.3% in July, which is 0.1% more than the market expectations. It should be noted that the improvement on the labor market has led to an increase in the probability of the Fed raising interest rates in December to 47%. Tightening of monetary policy leads to an increase in the US dollar and reduction of the attractiveness of gold compared with assets that generate interest income. Our medium-term outlook for gold remains positive due to the expected drop in US stock markets.
The price of Light Sweet crude oil continued to adjusted upwards despite of the strengthening of the US dollar. Positive employment data in the US points to further growth in demand for oil in the country. It should be noted that the drilling activity in the US continued to grow for 6 consecutive weeks, which, together with the preservation of the oversupply of oil on the market, will be the basis for the continuation of the negative dynamics of prices in the medium term. According to our estimates, the current growth within the correction will be short and falling prices will resume in the near future with potential targets at 40 and 35 dollars per barrel.