Gold Holds Gains as Rate Hike Fears Ease

Gold traded near $4,200 an ounce on Monday, holding onto last week’s gains as weaker-than-expected US jobs data and lower oil prices led traders to scale back expectations for Federal Reserve interest rate hikes. Oil prices edged lower as recovering energy flows through the Strait of Hormuz and the prospect of increased OPEC+ supply fueled concerns about a potential glut. That has helped ease inflationary pressures that had previously heightened fears of further rate hikes and weighed on non-yielding gold. Meanwhile, data released last week showed US nonfarm payrolls increased by just 57,000 in June, the smallest gain in four months and well below forecasts of 110,000, prompting traders to reduce their bets on a September rate hike. According to the CME FedWatch tool, the probability of a hike fell to 50%, down from 66% before the report.

Gold climbed to $4,170 per ounce on Friday, touching its highest level since June 23 and reporting a 2% weekly gain after 4 consecutive weeks of declines, as weak US jobs data reduced expectations for a near-term Federal Reserve interest rate hike. US nonfarm payrolls increased by just 57,000 in June, the smallest rise in four months and far below the 110,000 forecast, prompting traders to lower their bets on a September rate hike. According to the CME FedWatch tool, the probability of a hike dropped to 50%, down from 66% before the report. Lower interest rates decrease the opportunity cost of holding non-yielding assets like gold. Additionally, the US dollar was on track for its largest weekly decline since April, further supporting gold prices. Central banks also contributed to demand, adding a net 41 metric tons of gold to reserves in May, per World Gold Council data. In physical markets, Indian demand softened as prices rose, while Chinese buying interest saw a slight improvement.

Gold climbed toward $4,200 an ounce on Friday, extending gains from the previous session as weaker-than-expected US jobs data prompted traders to scale back bets on Federal Reserve rate hikes. The US economy added just 57,000 jobs in June, the fewest in four months and well below forecasts of 110,000, while the unemployment rate stood at 4.2%. That followed a report on Wednesday showing private-sector job growth also came in below expectations. Fed funds futures now imply roughly a 50% chance of a September rate hike, down from 67% before the latest employment data. Fed Chair Kevin Warsh also said this week that inflation expectations are moderating while reaffirming the central bank’s commitment to maintaining price stability. Meanwhile, gold drew additional support from lower oil prices and easing inflation concerns as commercial shipping through the Strait of Hormuz continued to recover amid progress in US-Iran talks.