Gold maintained its firm stance on Monday, driven by optimism that the Federal Reserve may pause its interest rate hikes this year. This hope was further fueled by U.S. data indicating a spike in the unemployment rate. However, the precious metal remained just below the one-month highs it reached in the previous session, largely due to the strength of the U.S. dollar.
Key Highlights:
Gold’s Modest Gain: Spot gold edged up by 0.2% to reach $1,941.89 per ounce as of 0127 GMT, following its recent climb to $1,952.79 on Friday. Meanwhile, U.S. gold futures posted a slight 0.1% increase, reaching $1,967.90.
Dollar’s Strength: The U.S. dollar continued to hover near its recent near-three-month highs, diminishing gold’s appeal for international buyers. It’s important to note that U.S. markets were closed for a holiday on Monday, potentially contributing to subdued trading activity.
U.S. Job Data: Data released on Friday indicated an uptick in U.S. job growth for the month of August. However, the unemployment rate saw a notable increase, reaching 3.8%, while wage gains moderated.
Impact of Fed‘s Rate Hikes: A former vice chairman of the U.S. Federal Reserve noted that the full effects of the interest rate hikes initiated in March 2022 have not yet been fully transmitted to the real economy.
U.S. Manufacturing: U.S. manufacturing continued to contract for the 10th consecutive month in August, although the pace of decline showed signs of slowing.
Euro-Zone and China: In contrast, manufacturing downturns in the euro-zone appeared to ease last month, suggesting potential relief for the bloc’s struggling factories. Additionally, an unexpected rebound in China offered hope for economies reliant on exports, as indicated by private surveys.
Physical Gold Premiums in China: Premiums on physical gold in China retreated from recent highs last week. This shift was attributed to reduced safe-haven buying, driven by hopes that stimulus measures could bolster the Chinese economy, which is a major buyer of bullion.
SPDR Gold Trust: The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, reported a modest 0.10% increase in its holdings on Friday.
Nigeria’s Mining Sector: Nigeria announced plans to establish a solid minerals corporation aimed at attracting investments to its mining sector, according to a statement made by a government minister on Sunday.
Other Precious Metals: Among other precious metals, spot silver experienced a minor dip of 0.1%, settling at $24.13 per ounce, while platinum eased by 0.2% to $958.95. Palladium posted a slight gain of 0.3%, reaching $1,221.26.
Despite the resilience of gold amid uncertainties in the global economic landscape, the strength of the U.S. dollar remained a prominent factor influencing the precious metal’s performance. As investors closely monitor economic data and central bank actions, the outlook for gold continues to be shaped by a complex interplay of factors on the global stage.
