Gold succumbs to profit-taking after US jobs data-fuelled rally

[BENGALURU] Gold prices slipped on Monday (Aug 4) as investors booked profits after a sharp rise in the previous session following weaker-than-expected US jobs data that boosted expectations for a US Federal Reserve interest rate cut in September.

Spot gold lost 0.3 per cent to US$3,351.80 per ounce as at 8.55 am. Bullion had risen more than 2 per cent on Friday. However, US gold futures gained 0.2 per cent to US$3,404.80.

The US dollar index fell 0.5 per cent against a basket of rivals, making gold more affordable for holders of other currencies. Meanwhile, the benchmark 10-year yield languished near a five-week trough.

A weaker than expected US employment growth in July and a downward revision of 258,000 jobs in the May and June non-farm payrolls signalled a sharp deterioration in labour market conditions and revived hopes of a Fed rate cut in September, with markets now pricing in a 90 per cent chance, per CME FedWatch tool.

Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.15 per cent to 953.08 tonnes on Friday from 954.51 tonnes on Thursday.

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Demand for physical gold in key Asian markets improved slightly last week as a pullback in prices sparked buying interest, though volatility kept some buyers cautious.

Asian markets tracked Wall Street lower as fears for the US economy returned with a vengeance, prompting investors to price in an almost certain rate cut in September and undermining the dollar.

Spot silver fell 0.5 per cent to US$36.83 per ounce, platinum slipped 0.6 per cent to US$1,307.25 and palladium dipped 1.6 per cent to US$1,189.27. REUTERS