Gold Prices Rise on Dollar Weakness, Weak Payrolls Shift Focus to Rate Cuts
Gold prices in Asian trading gained ground on Monday, taking advantage of a recent decline in the dollar. Weaker-than-expected U.S. payrolls data prompted traders to increase their bets on eventual interest rate cuts by the Federal Reserve.
The increase in gold prices was tempered by improved risk sentiment following Friday’s release of nonfarm payrolls data, which prompted investors to shift towards riskier assets like stocks.
Spot gold climbed by 0.4% to $2,310.05 per ounce, while gold futures expiring in June increased by the same percentage to $2,318.70 per ounce as of 00:31 ET (04:31 GMT).
Gold prices regained some ground as expectations for interest rate cuts resurfaced.
Gold’s recovery was also prompted by its recent sharp decline from record highs observed over the past three weeks. Concerns about persistently high interest rates and diminishing safe-haven demand have been major factors weighing on gold in recent trading sessions.
The decline in the dollar, which lost 0.8% last week, provided some relief for the yellow metal. The dollar’s weakness was primarily fueled by Friday’s payrolls report, which prompted heightened speculation that the Federal Reserve may start cutting interest rates by September.
Although a slowing labor market provides some motivation for the Fed to consider rate cuts, its primary concern remains the persistent inflationary pressures. Inflationary trends have pushed above the Fed’s target of 2% annually in the first quarter, prompting traders to largely abandon expectations for rate cuts this year.
High interest rates are typically detrimental to gold, as they elevate the opportunity cost associated with holding the precious metal.
This week, attention is centered on a series of speeches by key Federal Reserve officials, offering investors additional insights into the future direction of interest rates.
On Monday, other precious metals showed mixed performance. Platinum futures declined by 0.3% to $962.60 per ounce, while silver futures rallied by 1.7% to reach $27.130 per ounce.
Copper prices climbed amid a softer dollar, nearing two-year highs.
Copper prices moved higher on Monday, approaching two-year highs, buoyed by a weaker dollar, which lent support to metal prices.
Three-month copper futures on the London Metal Exchange climbed 1.7% to $9,930.0 per ton, while one-month copper futures increased 0.5% to $4.5888 per pound.
Both contracts continued to hover near two-year highs amid anticipation of tighter markets due to metal sanctions against Russia and optimism about improving demand from top importer China.
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