Gold prices made a steady climb on Monday, approaching a one-month high reached in the previous session. This ascent was bolstered by a slight retreat in the value of the dollar and growing optimism that the U.S. Federal Reserve is leaning towards a pause in interest rate hikes for the remainder of the year.
Spot gold exhibited a 0.3% gain, reaching $1,943.65 per ounce as of 0724 GMT, following its surge to $1,952.79 last Friday. Meanwhile, U.S. gold futures registered a 0.2% increase, reaching $1,970.
The latest data, released on Friday, revealed an increase in U.S. job growth for the month of August. However, this positive news was somewhat offset by a jump in the unemployment rate to 3.8% and moderated wage gains. These developments have reinforced expectations of an interest rate pause by the Federal Reserve this month, consequently exerting downward pressure on the dollar.
Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, commented, “It seems that the current Fed hiking cycle has started to trigger some form of gradual easing in the U.S. labor market, which may taper off elevated inflationary expectations.”
According to the CME FedWatch tool, traders now estimate a 93% likelihood that the Federal Reserve will maintain its current interest rates at the upcoming September meeting.
Gold, as a non-interest-bearing asset, often loses appeal when interest rates are on the rise. Tim Waterer, Chief Market Analyst at KCM Trade, noted, “The precious metal will be at the mercy of what happens to Treasury yields leading up to the September FOMC meeting.” He further added that a retreat in yields based on expectations of more restrained interest rate actions would be a positive development for gold.
Looking ahead, at least seven Fed officials are scheduled to speak during this week, leading up to the next policy meeting scheduled for September 19-20.
On a technical note, Kelvin Wong pointed out that “the momentum factor has turned increasingly positive as spot gold manages to trade above the 50-day moving average for four consecutive sessions, now acting as a support at $1,930.”
In other precious metal news, spot silver experienced a minor dip of 0.2%, settling at $24.11 per ounce. Platinum also witnessed a decline of 0.3%, falling to $957.76, while palladium posted a modest gain of 0.2%, reaching $1,220.16.
