Gold prices held steady on Thursday as dealers took on a wait-and-see attitude before the much-awaited U.S. payrolls data. It is anticipated that the data will provide clues for an impending Federal Reserve rate cut decision later this month.
Current Gold Prices per 0440 GMT, spot gold was constant at $2,494.73 an ounce while U.S. gold futures fell by a slight 0.1% to $2,524.90.
Gold’s Position Amid Interest Rates and Economic Uncertainty In low-interest rate environments, gold serves best as an investment since it is a non-yielding asset. Moreover, during times of political instability and economic uncertainty, it is also considered a haven by many investors. Thus, these aspects have led to a greater emphasis on the yellow metal among post-pandemic economies globally.
Labor Market Slowing Down Recently released data shows July’s U.S job openings are at their lowest for three and half years indicating a cooling down labor market but not enough for significant cuts this month according to some observers from other parts of the world about this month’s interest rates cut by Federal Reserve Bank (FOMC).
San Francisco Federal Reserve President Mary Daly has stressed the importance of cuts in interest rates to maintain a healthy labor market, which is indicative of the possible approach the Fed would take in the future.
Expectations for Rate Cuts in the Market According to the CME FedWatch Tool, there was an increase in the chances of a 50-basis-point cut from 38% to 45% on September 18. The non-farm payrolls (NFP) report that will be released later this week is expected to have an impact on what market players think will happen moving forward.
Tim Waterer who is KCM Trade’s chief market analyst suggested that if the NFP data does not meet projections, then the possibility of a 50-basis-point cut can rise. Such action is likely to lead to the depreciation of dollar exchange rates and the appreciation of gold prices. He further predicted that if the Federal Reserve cuts interest rates several times before year-end, it may result in the gold price reaching $2600 by December 2024.
Other Data Needs Attention Still in focus for investors today includes the ADP employment report, United States service industry estimates, and unemployment claims which can give further indications about the United States’ economic health and shape future changes in gold prices.
Increasing Requirement for Gold from Central Banks According to NAB (National Australia Bank) analysts, over the past quarters central banks have been important players in driving up demand for gold. Reflecting this continued positive strength of gold within the international marketplace’s continuing encouraging trend was NAB’s upward revision of its forecast average price per ounce to US$2315 in 2024.
