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Gold jumps on weaker dollar, rate cut expectations


Spot gold added 1% to $2,324.94 per ounce, and U.S. gold futures for June delivery settled 0.9% higher at $2,331.2 per ounce

Gold prices jumped more than 1% on Monday, as the U.S. dollar weakened after softer-than-expected U.S. jobs data fuelled expectations of potential interest rate cuts by the Federal Reserve later this year.

Spot gold added 1% to $2,324.94 per ounce by 1800 GMT. U.S. gold futures for June delivery settled 0.9% higher at $2,331.2 per ounce.

The downside that we have seen over the past few weeks might actually be running out of steam, opening the door for gold prices to resume their upward trajectory, according to Daniel Ghali, commodity strategist at TD Securities.

Bullion shed nearly 1.5% last week.

Data on Friday showed job growth in the U.S. slowed more than expected in April, while the rise in annual wages dropped below 4.0% for the first time in around three years.

While gold is traditionally considered a hedge against inflation, lower interest rates reduce the opportunity cost of holding bullion and weigh on the dollar, in which gold is priced.

The U.S. dollar was a touch lower on Monday, after staying near its lowest level in almost a month on Friday, following the employment report.

We continue to expect two rate cuts this year, in July and November, Goldman Sachs wrote in a note. The April employment report was soft but not weak, it said.

Chances of rate cuts in September were around 66% on Monday, according to CME’s FedWatch Tool.

Gold also found support from ongoing tensions in the Middle East.

Other precious metals also gained, with spot silver increasing 3.3% to $27.40 per ounce, and palladium gaining 3.6% to $979.83.

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