Gold steady near two-week high as Fed rate bets ease

Gold Prices Steady Near Peak After Weak US Payrolls Report

Gold prices remained steady near a two-week high on Monday, supported by softer expectations of interest rate hikes from the U.S. Federal Reserve following weaker-than-expected U.S. jobs data released last week. The market reaction came after signs of a cooling labour market, which reduced concerns about aggressive monetary tightening and helped bullion maintain its upward momentum.

Spot gold was steady at $4,174.66 per ounce as of 0252 GMT, after touching its highest level since June 22 earlier in the trading session. Meanwhile, U.S. gold futures for August delivery rose 1.5% to $4,186.70 per ounce, reflecting continued investor interest in the metal after last week’s gains.

Market sentiment around gold has improved following the latest U.S. payrolls report, which showed weaker employment growth and revisions lower for previous months. This data shifted expectations in financial markets, as traders reassessed the likelihood of further rate increases by the Federal Reserve in the near term.

According to market analysis, gold has benefited from the adjustment in rate expectations, as lower interest rate prospects generally support non-yielding assets like bullion. However, some pressure remains due to currency movements, particularly the strength of the U.S. dollar.

A market expert noted that gold has regained stability as investors reduce expectations for additional rate hikes. However, the stronger dollar continues to limit further upside momentum in prices. The dollar itself rose by 0.1%, making dollar-denominated commodities like gold more expensive for holders of other currencies, which can reduce demand pressure at times.

Last week, gold posted a strong performance, gaining more than 2%, ending a four-week losing streak. This recovery was largely driven by the weaker U.S. payrolls data, which eased fears of sustained inflationary pressure and prolonged high interest rates. The shift allowed gold to regain ground after several weeks of downward pressure.

The U.S. jobs data released on Thursday showed that job growth slowed sharply in June, while payroll gains for the previous two months were also revised lower. This combination pointed toward a cooling labour market, which influenced market expectations regarding Federal Reserve policy decisions.

Following the release of the data, financial markets adjusted their outlook for future interest rate moves. Traders are now pricing in approximately a 55% chance of a rate increase in September, down from more than 60% before the jobs report, according to the CME FedWatch tool. This decline reflects a softer policy outlook, which tends to support gold prices.

Gold is often influenced by interest rate expectations because it does not generate yield. When interest rates are lower or expected to remain steady, the opportunity cost of holding gold decreases, making it more attractive to investors seeking stable value rather than income-generating assets.

Investors are now turning their attention to upcoming Federal Reserve communications, particularly the minutes of the June 16–17 meeting, which are scheduled for release on Wednesday. These minutes are expected to provide further insight into the central bank’s thinking on inflation, employment trends, and future policy direction.

Market participants will closely examine these minutes for any signals regarding whether the Fed is leaning toward maintaining current rates or considering further adjustments. Such signals often influence short-term movements in precious metals and currency markets.

Despite recent strength in gold, some financial institutions have expressed caution regarding its future upside potential. One major global bank noted that demand for gold from key sectors may not be as strong as previously expected. As a result, it has projected that gold prices may be limited to around $4,300 in the third quarter and $4,500 in the fourth quarter of the year.

This outlook suggests that while gold may remain supported in the near term, longer-term gains could be constrained by demand conditions and broader market factors.

In addition to gold, other precious metals showed mixed performance on Monday. Spot silver fell 0.6% to $62.03 per ounce, after briefly reaching its highest level since June 23 earlier in the session. This indicates some profit-taking or cooling momentum following recent gains in the silver market.

Platinum slipped 0.1% to $1,636.60 per ounce, showing relatively stable movement with only a minor decline. Meanwhile, palladium decreased by 0.2% to $1,271.75 per ounce, reflecting a slightly weaker trend across the broader precious metals complex.

Overall, the precious metals market continues to respond closely to economic data from the United States, particularly labour market indicators and inflation-related signals. The latest developments suggest a shift toward more cautious expectations regarding monetary tightening, which has provided support to gold and influenced trading patterns across related metals.

As investors await further clarity from the Federal Reserve, market volatility in gold and other metals is likely to remain sensitive to upcoming economic releases and policy signals. The combination of weaker employment data, shifting rate expectations, and currency movements continues to shape the short-term direction of bullion prices.

For now, gold remains positioned near recent highs, with traders balancing weaker dollar-sensitive demand against improving macroeconomic sentiment linked to easing rate hike expectations.
(SOURCE:ARYNEWS)