Gold prices increased on Thursday as recent economic data intensified expectations for a substantial interest rate cut by the Federal Reserve this month. However, investor caution ahead of the upcoming U.S. payrolls report limited the metal’s advance.
By 0630 GMT, spot gold was up 0.5%, trading at $2,506.00 per ounce, while U.S. gold futures saw a 0.4% gain, reaching $2,536.10.
Gold, a non-yielding asset, often benefits from lower interest rates and serves as a safe haven amid economic and geopolitical uncertainties.
Recent data revealed that U.S. job openings fell to a three-and-a-half-year low in July. Although this drop suggests a weakening labor market, it might not be sufficient on its own to prompt the Fed to implement a half-percentage-point rate cut.
According to the CME FedWatch Tool, the likelihood of a 50-basis-point rate cut has risen to 45% from 38%. Market attention now turns to the non-farm payrolls (NFP) report scheduled for Friday.
San Francisco Fed President Mary Daly highlighted the necessity of rate cuts to maintain a healthy labor market.
“We’re seeing a cautious approach from investors as they await the NFP figures,” said Tim Waterer, chief market analyst at KCM Trade. “If the data disappoints, the probability of a 50-bp rate cut could increase, which would likely support higher gold prices.”
Waterer also noted that gold’s 2024 highs might still be in reach, with a potential target of $2,600 if the Fed implements multiple rate cuts before the end of the year.
In addition to the NFP report, investors are keeping an eye on the ADP employment report, U.S. services industry data, and jobless claims figures due later today.
“Central banks have been significant drivers of gold demand recently,” noted analysts at NAB, who also raised their 2024 average gold price forecast to $2,315.
Meanwhile, other precious metals also saw gains: spot silver increased by 0.3% to $28.37, platinum rose by 1% to $911.58, and palladium climbed 0.3% to $936.43.
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