Gold fell on Monday 08 July as investors booked profits after soft US employment data fuelled prices to a more than one-month high on growing expectations that the Federal Reserve will start cutting interest rates in September.
Spot gold fell 0.9% to $2,370.00 per ounce as of 10:00 GMT, after rising to its highest level since 22 May on Friday, 05 July. US gold futures fell 0.8 per cent to US$2,377.50.
Last week’s data pointed to a loosening of the labour market that keeps the US central bank on track to start cutting interest rates soon.
The markets are currently predicting a 74 per cent chance that the Federal Reserve will cut interest rates in September, as well as a further reduction in December.
“We shouldn’t forget that gold had a good rally last Friday, 08 July, so some profit-taking and a stronger dollar after the French elections are weighing on gold today,” said UBS analyst Giovanni Staunovo.
“Lower US interest rates are likely to support more inflows into gold ETFs (exchange-traded funds), which probably have room to push the yellow metal to $2,600/oz by the end of the year.”
This week, investors’ focus will be on Fed Chairman Jerome Powell’s semi-annual testimony to Congress, comments from a number of Fed officials and US inflation data.
“If we get another negative surprise in the inflation data, which we’ve seen pretty consistently in the US data, then that will be a headwind for gold,” said Kyle Rodda, financial market analyst at Capital.com.
On the other hand, China’s central bank, the main consumer, refrained from buying gold for its reserves for the second month in a row in June.
“Monthly data based on IMF reports doesn’t capture the full picture of central bank activity, so I wouldn’t be surprised if the final data from the World Gold Council indicates solid central bank activity in the second quarter of this year,” said Staunovo of UBS.
Spot silver fell 0.9 per cent to $30.94, platinum fell 1.6 per cent to $1,010.79 and palladium fell 2.6 per cent to $999.52.
Semanário Económico
