Gold Rises Again.
Gold prices surged over 1% on Monday, driven by a weakening U.S. dollar following softer-than-anticipated U.S. employment data. This unexpected turn has sparked speculation about potential interest rate cuts by the Federal Reserve later in the year, bolstering the appeal of the precious metal as a safe-haven asset.
By 2:00 p.m. ET (1800 GMT), spot gold had climbed 1% to reach $2,324.94 per ounce, while U.S. gold futures for June delivery settled 0.9% higher at $2,331.2 per ounce. Daniel Ghali, commodity strategist at TD Securities, remarked that the recent downtrend in gold prices may be losing momentum, potentially paving the way for a resurgence in its upward trajectory.
Last week, bullion experienced a 1.5% decline. However, the release of U.S. job data on Friday revealed a slowdown in job growth, coupled with an annual wage increase falling below 4.0% for the first time in nearly three years. These figures have fueled expectations of interest rate cuts by the Federal Reserve, as lower rates diminish the opportunity cost of holding gold and exert downward pressure on the U.S. dollar, the currency in which gold is denominated.
The U.S. dollar, which had been hovering near its lowest level in approximately a month following the employment report, remained subdued on Monday. Analysts at Goldman Sachs anticipate two rate cuts by the Fed this year, likely in July and November. Despite describing the April employment report as soft rather than weak, they maintain expectations for monetary easing.
According to CME’s FedWatch Tool, the probability of rate cuts in September stood at approximately 66% on Monday. In addition to domestic economic indicators, gold also drew support from geopolitical tensions in the Middle East, notably Israel’s military operation in Rafah, contributing to market uncertainty and boosting demand for safe-haven assets.
In tandem with gold, other precious metals witnessed gains as well. Spot silver surged by 3.3% to $27.40 per ounce, while palladium recorded a 3.6% increase to reach $979.83. Platinum, meanwhile, maintained stability at $955.35 per ounce.
The rally in precious metals reflects a broader sentiment of risk aversion among investors amid economic uncertainties and geopolitical tensions. As market participants monitor developments in central bank policies and geopolitical dynamics, the appeal of safe-haven assets like gold is expected to remain strong, potentially driving further price movements in the coming weeks.
