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Gold firms, set for a second weekly gain

Gold prices

Spot gold gained 0.3% to $2,363.25 per ounce, and was more than 1% higher for the week

Gold prces firmed on Friday and were set for a second consecutive weekly gain, while traders awaited U.S. employment data to gauge the path of the Fed’s potential interest rate cuts.

Spot gold gained 0.3% to $2,363.25 per ounce, as of 0709 GMT and was more than 1% higher for the week. U.S. gold futures added 0.1% to $2,372.30.

The U.S. dollar was on track for a weekly drop, making dollar-priced bullion more attractive to buyers holding other currencies.

Gold has enjoyed a productive week so far, with the precious metal being a beneficiary of some softer U.S. macro data, according to Tim Waterer, KCM Trade’s chief market analyst.

Economic data on Wednesday, including weak services and ADP employment reports, pointed to a slowing U.S. economy. A separate report showed a rise in initial applications for U.S. unemployment benefits last week.

The U.S. nonfarm payrolls report due at 1230 GMT is in focus.

If the jobs data misses the mark on the lower side, I expect investors will start to further fancy a possible September rate cut from the Fed, which could see gold have another crack at the $2,400 level, Waterer added.

Traders are currently pricing in around a 73% probability of a Fed rate cut in September, shows the CME FedWatch Tool.

Lower interest rates reduce the opportunity cost of holding non-yielding gold.

Analysts at NAB expect gold prices to average near $2,200 per ounce this year before dropping to $2,050 in 2025.

Gold demand in early 2024 has been underpinned by central bank purchases – with a key priority of these institutions appearing to be the diversification of assets within their reserves, NAB said in a note.

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