Gold prices under pressure after strong jobs report
Gold prices eased on Monday as bets firmed for a smaller U.S. rate cut in November after a surprisingly strong jobs report, while market participants awaited inflation data and comments from Federal Reserve officials for further cues.
Spot gold slipped 0.2% to $2,647.43 per ounce by 0211 GMT. U.S. gold futures were unchanged at $2,666.80.
Rate cut expectations recalibrated
The stronger-than-expected September jobs report, released on Friday, poured cold water on expectations of a large Fed rate cut next month, boosting the dollar. Traders now see a 93.4% probability that the Fed will cut rates by only a quarter of a percentage point in November, according to CME’s FedWatch tool. They have scaled back expectations for a 50 basis-point cut to 0% from 28%.
Geopolitical risks and safe-haven appeal
“Geopolitical risks in the Middle East could support safe-haven flows for the yellow metal, which limit the downside from a less-dovish market rate pricing,” said IG market strategist Yeap Jun Rong. Gold is expected to remain supported with U.S. election uncertainties ahead, further reinforcing its status as a preferred investment during times of low interest rates and economic and political uncertainties.
Key events to watch this week
This week, market participants will focus on minutes of the Fed’s last policy meeting, as well as the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data. Additionally, a number of U.S. central bank officials are scheduled to speak, providing further insight into the Fed’s monetary policy outlook.
Global tensions and gold holdings
In the Middle East, Israel conducted bombings in Lebanon and the Gaza Strip, heightening geopolitical tensions in the region. Meanwhile, China’s gold holdings remained steady at 72.8 million fine troy ounces at the end of September, indicating continued interest in the precious metal.
Silver, platinum, and palladium performance
Spot silver remained flat at $32.17 per ounce, while platinum gained 0.5% to $989.36 and palladium rose 1% to $1,022.20. These metals continue to attract investors seeking diversification in their precious metal holdings.
Overall, while gold prices face pressure due to reduced rate cut expectations, geopolitical uncertainties and global economic conditions continue to provide support for the precious metal. As events unfold this week, market participants will closely monitor key indicators to gauge the future direction of gold prices.
