Gold Prices Edge Slightly Higher as Investors Anticipate Interest Rate CutGold Prices Edge Slightly Higher as Investors Anticipate Interest Rate Cut Gold prices remained essentially unchanged on Thursday, hovering near a two-week high. The precious metal strengthened on Wednesday following the release of weaker-than-anticipated U.S. economic data, suggesting a potential interest rate cut in September. The data indicated a deceleration in the services sector and job creation, raising hopes among investors for a more accommodative stance from the Federal Reserve. Lower interest rates tend to enhance the attractiveness of non-yield-producing assets like gold. Analysts also pointed to the recent U.S. sanctions imposed on Russia, which may prompt central banks and governments to increase their holdings of gold as a means of reducing counterparty and default risks. Non-Farm Payroll Data in Focus Market participants are now closely monitoring Friday’s U.S. nonfarm payroll report. The consensus forecast anticipates a moderation in job creation last month. If confirmed, this could alleviate wage pressure and contribute to a positive reaction in the precious metals market. Other Precious Metals Spot silver declined slightly by 0.3%, while platinum gained 1.4%. Palladium, after reaching its highest level since mid-April on Wednesday, experienced a 0.9% decline.
* US sanctions encourage central banks to move toward gold – analyst
* US non-farm payrolls report out Friday
* Palladium hit its highest level since mid-April on Wednesday
July 4 (Reuters) – Gold prices were little changed on Thursday near a two-week high after weaker-than-expected U.S. economic data fueled hopes of a September interest rate cut and a shift in focus to non-farm employment data.
Spot gold was unchanged at $2,357.78 an ounce by 0959 GMT, after prices hit their highest level since June 21 on Wednesday. U.S. gold futures fell 0.1% to $2,366.20.
Precious metal prices rose more than 1% in the previous session after a weak services sector report and an ADP jobs report on Wednesday pointed to a slowing U.S. economy.
“It looks like there’s a good chance that the rate cuts will happen sometime in late Q3 or early Q4, which makes gold a lot more attractive than alternative bonds,” said Alex Ebkarian, chief operating officer at Allegiance Gold.
Lower interest rates reduce the opportunity cost of holding gold that does not produce a yield.
The minutes of the Fed’s June meeting acknowledged that the U.S. economy appeared to be slowing and that “price pressures were easing.”
“In the long term, we see the sanctions imposed by the US causing many central banks and other governments to move into gold, specifically to eliminate counterparty and default risk,” Ebkarian said.
The sanctions, announced last month, are aimed at cutting off Russia’s access to products and services needed to maintain military production for the war in Ukraine.
Traders are now focusing on U.S. nonfarm payrolls data, due Friday. The market expects weaker job creation last month, said Ole Hansen, head of commodities strategy at Saxo Bank.
“If these figures are confirmed, the precious metals market is likely to react positively to the expected reduction in wage pressures,” Hansen said.
Spot silver fell 0.3% to $30.37, while platinum rose 1.4% to $1,010.95.
Palladium fell 0.9% to $1,020.75 after hitting its highest level since mid-April in the previous session.
(Reporting by Sherin Elizabeth Varghese and Daksh Grover in Bengaluru; Editing by Jason Neely)
