Gold prices dip slightly before release of US jobs report, poised for weekly increase

Gold prices inch lower, heading for weekly gain

On June 7, Reuters reported that gold prices were slightly down on Friday, but were on track to secure their first weekly gain in three weeks. Investors were eagerly awaiting the release of U.S. non-farm payrolls data later in the day to gain insights into the potential outlook for interest rate cuts.

Market Fundamentals

As of 0144 GMT, spot gold was down 0.2% at $2,371.04 per ounce, with bullion having gained about 2% for the week so far. Meanwhile, U.S. gold futures remained unchanged at $2,384.50.

The attractiveness of gold as an investment option was bolstered by the weakening of the dollar, which hovered near an eight-week low, and the struggles faced by benchmark 10-year U.S. Treasury yields, marking their worst week since December 2023. These factors made non-yielding bullion more appealing for investors seeking a safe haven.

Factors Driving Gold Prices

Metals Focus, a consultancy, anticipated that gold prices would reach another record high this year despite a decrease in physical demand. The prospect of interest rate cuts, set against a backdrop of U.S.-China tensions and conflicts in regions like Ukraine and the Middle East, further supported the bullish outlook for gold prices.

Investors awaited the non-farm payrolls data, scheduled for release at 1230 GMT, to assess the health of the U.S. economy and gauge potential impacts on the Federal Reserve’s decision regarding rate cuts in September. Currently, traders were factoring in a 68% chance of a rate cut in September, according to the CME FedWatch tool.

Additional Insights

Amidst this market environment, lower interest rates play a crucial role in reducing the opportunity cost of holding non-yielding bullion. Furthermore, reports of declining gold product sales at the Perth Mint in May contrasted with Poland’s decision to increase its gold reserves with a recent purchase of 5 tons of gold, indicating varying trends in demand and central bank actions related to gold.

Meanwhile, the London Bullion Market Association (LBMA) disclosed its review of allegations concerning Indonesian state miner Aneka Tambang (Antam) regarding the purity of its gold products, highlighting the importance of maintaining transparency and quality standards in the precious metals market.

In the broader market, spot silver experienced a slight decline to $31.16 per ounce, platinum saw a modest increase at $1,006.75, and palladium dipped slightly to $928.25 per ounce.

Upcoming Data and Events

The data and events scheduled for the day included the release of US Non-Farm Payrolls and Manufacturing Payrolls data for May, along with Wholesale Inventories data for April and FX Reserves data from Hong Kong for May.

As the market awaited crucial economic indicators and navigated geopolitical uncertainties, the outlook for gold prices remained mixed, drawing attention to the evolving dynamics influencing the precious metals market.