Strong ADP results
The US added 324,000 jobs in June, once again far exceeding market expectations of 185,000 jobs, marking the fourth consecutive month of surpassing forecasts. Additionally, the previous figure was revised downward from 497,000 to 455,000 jobs. Hourly wage also continued to fall. This shows that the job market continues to exhibit resilience, which may help the economy avoid a recession. Despite the Federal Reserve raising interest rates by 525 basis points since March 2022, the labor market is gradually slowing down. As a result, the US dollar continues to strengthen, leading to a pullback in precious metal prices.
However, apart from the positive economic data, the appreciation of the US dollar is also influenced by an increase in safe-haven demand due to Fitch's downgrade of the US credit rating, and it reflects market expectations of future relative scarcity of the US dollar. Consequently, precious metals may experience a period of volatility. In the short term, there is still liquidity risks but in the long run, precious metals still hold value for allocation on dips.
However, apart from the positive economic data, the appreciation of the US dollar is also influenced by an increase in safe-haven demand due to Fitch's downgrade of the US credit rating, and it reflects market expectations of future relative scarcity of the US dollar. Consequently, precious metals may experience a period of volatility. In the short term, there is still liquidity risks but in the long run, precious metals still hold value for allocation on dips.
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