Gold trades near two-week high on cooling US rate-hike bets

[BENGALURU] Gold prices held near a two-week high on Monday (Jul 6) after a cooler-than-expected US jobs report last week slightly tempered expectations of interest rate hikes by the US Federal Reserve.

Spot gold was steady at US$4,175.02 per ounce by 8.28 am Singapore time, after posting a weekly gain of more than 2 per cent following four straight weeks of declines on Friday. US gold futures for August delivery climbed 1.5 per cent to US$4,186.80 per ounce.

Data on Thursday showed US job growth slowed sharply in June and payroll gains for the prior two months were revised lower, pointing to a cooling labour market and prompting financial markets to dial back expectations for a near-term Fed rate hike.

Traders now see about a 55 per cent chance of a rate increase in September, down from more than 60 per cent before the data, according to the CME FedWatch tool.

Lower interest rates tend to be favourable to gold, as it is a non-yielding asset.

The release of the minutes from the Fed’s Jun 16 to 17 meeting, Kevin Warsh’s first as Fed chair, on Wednesday will be in focus for investors later this week.

JPMorgan said that demand for gold from key sectors would not be as strong as it had expected, limiting the rise in gold prices this year to US$4,300/oz in the third quarter and US$4,500/oz in the fourth quarter.

Physical gold demand in India eased on Friday after a modest pick-up earlier in the week, as prices rebounded from a three-month low, while buying interest in China improved slightly.

Elsewhere, spot silver extended gains to a fifth session, up 0.1 per cent at US$62.4773 per ounce and earlier hitting its highest since Jun 23.

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Spot platinum added 0.4 per cent to US$1,645.05 per ounce and palladium was up 0.1 per cent to US$1,275.18 per ounce. Both these metals were on track for their fourth straight daily gain. REUTERS