Investing.com -- Gold rose sharply on Wednesday as the pace of hiring by U.S. employers in April decelerated to a two-year low in April, pushing the dollar down to fresh monthly lows and potentially lower the probability of a summer interest rate hike from the Federal Reserve.
On the Comex division of the New York Mercantile Exchange, Gold for August delivery traded between $1,245.50 and $1,267.50 an ounce before settling at $1,262.75, up $15.75 or 1.26%. Since dipping below $1,200 in late-May to fall to a three-month trough, gold has rebounded nicely, surging approximately 5% over the last week. Since the start of the year, gold futures are up by more than 15% holding onto gains from the strongest first quarter of a year in more than a decade.
Gold likely gained support at $1,125.00, the low from February 3 and was met with resistance at $1,304.40, the high from May 2.
On Wednesday morning, the U.S. Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS that the rate of hiring fell to 3.5% in April from 3.7% in March. It marked the lowest level since August, 2014. At the same time, job openings nationwide increased by 118,000 to a seasonally adjusted 5.79 million, the highest amount in 11 months. The job openings rate rose slightly by 0.1 to 3.9%.
The subdued hiring figures come on the heels of a dismal U.S. monthly employment report last week when the Labor Department reported that the economy added 38,000 in May, the fewest number of monthly jobs in nearly six years. The downbeat report provided an unexpected shock to the labor market, which added an average of 200,000 jobs per month last year – one of the highest annual totals since the Great Recession. On Monday, Federal Reserve chair Janet Yellen attempted to soothe markets by downplaying the significance of a single report.
Yellen's comments, however, have done little to convince market players that the Fed could resume tightening in the coming months. The chances of a July rate hike, according to the CME Group's (NASDAQ:CME) FedWatch tool, stood at 24.8% on Wednesday, down from 30.0% a month earlier. The market also sees practically no chance of a rate hike next week when the FOMC convenes for the two-day meeting next week. The current probability of a June rate hike fell to 1.9% on Tuesday from 3.8% during the previous day.
Any rate hikes from the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in periods of rising rate environments.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell more than 0.35% to an intraday low of 93.41. The index has crashed by more than 5% since early-December.
Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
In China, exports in dollar-denominated terms plunged 4.1% on an annual basis in May providing further indications of broad weakness throughout the world's second-largest economy. China is the world's largest producer of gold and the second-largest consumer behind India.
Silver for July delivery soared 0.621 or 3.79% to $17.015 an ounce, eclipsing $17 for the first time in three weeks.
Copper for July delivery ticked up 0.010 or 0.44% to $2.061 a pound. Copper futures rebounded on Wednesday, one day after plunging by more than 3% to three-week lows.