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Gold holds steady as U.S. rate cut hopes fade


Spot gold was unchanged at $2,296.17 per ounce, while U.S. gold futures dropped 0.5 per cent to $2,313.30

Gold prices held steady on Monday, after slumping in the previous session on China’s central bank pausing purchases and a robust U.S. jobs data dashing hopes of an imminent interest rate cut.

Spot gold was unchanged at $2,296.17 per ounce, as of 0751 GMT. U.S. gold futures dropped 0.5 per cent to $2,313.30.

Bullion dropped 3.5 per cent on Friday in its biggest one-day decline since November 2020 after a stronger-than-expected U.S. jobs report and China’s central bank pausing gold purchases to its reserves in May after 18 successive months of buying.

The medium-term bullish trend that was in picture since last week or so has now a chance of being damaged from a technical perspective, according to Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

Bets of the Fed reducing rates in September dropped to nearly 50 per cent from almost 70 per cent before the jobs data.

We expect a lift in the Fed’s median “dots plots” to two reductions in 2024 from three; but inflation should still moderate, and a September cut is our base case, UBS stated in a note.

The Federal Reserve is not expected to make any change at its policy meeting, but the focus will be on comments from Fed Chair Jerome Powell and changes to economic projections from policymakers. U.S. inflation data is also due on Wednesday.

Unless the dot plot pricing starts to be very less dovish, that means the Federal Reserve does not expect any cut being pencilled in this year at all, you could drastically see a tremendous sell-off in gold because that could push U.S. 10-year Treasury yields up, Wong added.

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