Gold falls to 2.5-month low after robust US labour market data

The gold price temporarily dipped to a 2½-month low of $1,163 per troy ounce on Friday and is only trading around $10 higher as the new week of trading gets underway. Friday's weakness was no doubt due to the robust US labour market figures, as 280,000 new jobs were created in the US in May, which is considerably more than had been expected. 

The US dollar appreciated noticeably in response, yields on ten-year US Treasuries also climbing significantly to an eight-month high of over 2.4%. This increases the opportunity costs of holding gold and reduces the attractiveness of the yellow precious metal, says Commerzbank. What is more, holdings of gold ETFs tracked by Bloomberg were also reduced by an additional 1.1 tons on Friday. They currently find themselves at their lowest level since March 2009. 

Speculative financial investors have also retreated further from gold, cutting their net long positions by 6.8% to 61,700 contracts in the week to 2 June. They are likely to be even lower by now.