Gold eyes second straight weekly rise; spotlight on US payrolls

GOLD prices edged up on Friday (Jul 5) and were set for a second straight weekly gain, while traders awaited US employment data to gauge the trajectory of the Federal Reserve’s potential interest rate cuts.

Spot gold rose 0.2 per cent at US$2,359.73 per ounce, as at 0204 GMT and was up more than 1 per cent for the week. US gold futures was down 0.1 per cent to US$2,366.10.

The US dollar was on track for a weekly decline, making US dollar priced bullion more attractive to buyers holding other currencies.

“Gold has enjoyed a productive week so far, with the precious metal being a beneficiary of some weaker US macro data,” said Tim Waterer, KCM Trade’s chief market analyst.

Economic data on Wednesday, including weak services and ADP employment reports, pointed to a slowing US economy. A separate report showed an increase in initial applications for US unemployment benefits last week.

Market spotlight is on the US nonfarm payrolls report due at 1230 GMT.

“If the jobs data misses the mark on the lower side, I expect investors will start to further fancy a possible September rate cut from the Fed, which could see gold have another crack at the US$2,400 level,” Waterer said.

“Gold has been in consolidation mode above US$2,300, which bodes well for potential further price gains once we eventually move towards a lower interest rate environment.”

Traders are currently pricing in about a 73 per cent chance of a Fed rate cut in September, according to CME FedWatch Tool.

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Gold ticks higher after weak data fuels US rate cut bets

Lower interest rates reduce the opportunity cost of holding non-yielding gold.

Spot silver rose 0.4 per cent to US$30.53 and was headed for its best week since May 17.

Platinum fell 0.3 per cent to US$999.86. Palladium gained 0.4 per cent to US$1,021.75 and headed for a third consecutive weekly gain. REUTERS