The US Dollar being the globally used currency in most of the international transactions, the movement of the US economic conditions is directly correlated with the US Dollar. The improvement of the economic conditions of the US economy strengthens the USD and vice-versa. Similarly, the US economic condition impacts the world economy and its impact spill over the world. The appreciation of the USD consecutively depreciates the corresponding currency with which it is exchanged. So, stronger the USD weaker will be the other currency with which it is exchanged and vice-versa.

The recent weaker growth prospects of the economic condition of the US combined with the increase in the unemployment rate has depreciated the USD. The employment data published shows that the unemployment rate remained at 7.2% with little change as compared with the previous September rate of 7.3%. In contrast, the total nonfarm payroll employment rose by 148,000 in September showing a little improvement in the job sector. But, the unemployment rate is too high to the US economy. Its impact has depreciated the USD by 0.6% against the JPY and euro remained stronger at USD 1.3786 on the EBS trading platform. Similarly, the dollar index last stood at 79.2180 with 0.02% fall.

The recursive impact of the employment data has shown its upshot on the gold prices. As there exists the negative correlation between the gold and USD, the depreciation of the USD has supported the rise in gold prices. The holdings of the SPDR Gold Trust expanded by 0.8% to 878.32 metric tons yesterday. It is the biggest bullion-backed exchange-traded product. The gold prices advanced 2% reaching to a three-week high after the payrolls data.

The bullion market for gold- Asia has been hit hard by the upcoming festive seasons. The cultural prospects of holding gold as the emblem of prestige in the festivals have increased the demand for gold. In India, the upcoming Diwali- festival of lights with worshipment of Goddess Laxmi, the god of wealth and exchange of gold products has up warded the gold demand. Also, the upcoming Indian wedding season, holiday seasons in U.S. and a lot of other countries involved in buying the gold jewelry may potentially hike the gold prices.

The prospective delays of the tapering by the Fed to the next year due to the non-improvement of the US economic conditions have too added to the rise in gold prices. The inverse correlation between gold and dollar weakened as the tapering was delayed for the next year. Goldman Sachs, the American multinational investment banking has made the prediction of delaying the tapering by Fed until March. It’s the wait and watch situation for the investors.