Gold prices reach two-week high
Gold prices hit a two-week high on Thursday as U.S. bond yields fell on signs of a cooling labor market, strengthening a case for a September interest rate cut by the Federal Reserve. This comes as investors positioned themselves for U.S. non-farm payrolls data.
Spot gold was up 0.4% at $2,363.03 per ounce as of 0858 GMT, after hitting a two-week high earlier in the session and rising 1% on Wednesday. U.S. gold futures rose 0.3% to $2,381.80.
The support for gold stems from expectations of a slowdown in the U.S. economy and a dovish central bank stance in the coming months, according to Kinesis Money market analyst Carlo Alberto De Casa. While a significant rally may not be imminent, the fact that gold has managed to stay above $2,300 is notable.
Impact of U.S. Labor Market Data
Benchmark 10-year U.S. Treasury yields were near their lowest in two months following indications this week that the labor market is cooling. The upcoming non-farm payrolls data on Friday is highly anticipated for further insights.
The Fed is expected to cut its key interest rate in September and possibly again later this year, as indicated by a majority of forecasters in a Reuters poll. Lower rates diminish the opportunity cost of holding non-yielding assets like gold.
Despite the positive outlook for the gold market, a resurgence of inflation in the U.S. could potentially exert pressure on gold prices.
Global Market Trends
In broader financial markets, global stocks were nearing an all-time high, and the euro was on the rise in anticipation of the European Central Bank’s first interest rate cut in nearly five years.
Impact on Other Precious Metals
Following the momentum in gold prices, other precious metals also saw gains. Spot silver rose 1% to $30.32 per ounce, platinum increased by 0.3% to $994.89, and palladium gained 0.3% to $933.95.
