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Gold prices fell significantly on the back of strong data on the US labor market

Gold fell by about 0.9%, retreating from a 1-year high, which was due to the growth of the US dollar and the revision of the Fed's monetary policy outlook against the background of data on the US labor market.

The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.13% to 102.22.

The Labor Department said on Friday that in March the nonfarm payrolls increased by 236 thousand, slightly below the expected (+240 thousand) and less than the +326 thousand in February (revised from +311 thousand). While the main figures indicate that the pace of job growth is slowing, the unemployment rate, which fell to 3.5% from 3.6% in February, indicates a tightening labor market. Economists had expected unemployment to remain at 3.6%. Meanwhile, the labor force participation rate rose to 62.6% from 62.5% in the previous month and exceeded the consensus forecast (62.5%). This indicator still remains below its pre-pandemic level of 63.3%. The report also showed that average hourly earnings rose 0.3%, as expected, after an increase of 0.2% in February. However, in annual terms, the growth rate slowed to 4.2% from 4.6% in February. Economists had expected an increase of 4.2%. Overall, a decline in the unemployment rate and an increase in labor force participation suggests that the labor market remains strong, and this will increase the likelihood of a 25 basis point rate hike. According to the CME FedWatch Tool, markets see a 64% chance that the Fed raised the interest rate by 0.25% at its May meeting, up from 57.2% a week earlier.

Meanwhile, experts note that as long as prices stay above $1,920 there are chances for the bullish outlook to continue.

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