July 1 (Reuters) – Gold prices inched higher on Monday, driven by short covering and bargain hunting, as investors focus on the upcoming U.S. jobs data, which could provide insights into potential interest rate cuts by the Federal Reserve.
Spot gold rose by 0.2% to $2,329.79 per ounce at 1:52 p.m. ET (1752 GMT), marking a more than 4% gain in the second quarter. U.S. gold futures remained largely unchanged, settling at $2,338.9 per ounce.
“We’re witnessing some short covering from short-term futures traders and bargain hunting in the cash market. Firm crude oil prices and a weaker U.S. dollar are also supporting the markets,” said Jim Wyckoff, senior market analyst at Kitco Metals. “We are likely to see gold prices move sideways or slightly lower for the rest of the summer,” he added.
In June, U.S. manufacturing contracted for the third consecutive month, and a measure of prices paid by factories for inputs fell to a six-month low due to weak demand for goods. This indicates that inflation could continue to ease.
This week’s focus includes remarks from U.S. Fed Chair Jerome Powell on Tuesday, minutes from the central bank’s latest policy meeting on Wednesday, and U.S. non-farm payrolls data on Friday. Last week’s data showed that U.S. prices were unchanged in May, while consumer spending rose moderately.
“Powell is likely to maintain a data-dependent stance, so if payrolls come in softer this week, it could boost gold prices,” said UBS analyst Giovanni Staunovo.
The market currently sees a 64% chance of the Fed cutting interest rates in September, with another cut expected in December. Lower interest rates reduce the opportunity cost of holding bullion.
In other precious metals, spot silver increased by 0.6% to $29.29 per ounce, platinum fell by 1.6% to $977.70, and palladium edged up by 0.1% to $973.61.
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