In the realm of Asian trading on Monday, gold prices experienced a notable uptick, riding the wave of a recent decline in the dollar. This surge followed the unveiling of softer-than-anticipated U.S. payrolls data, which prompted traders to ramp up their wagers on potential interest rate cuts by the Federal Reserve.
However, the ascent of gold was somewhat curbed by an uptick in risk appetite, observed in the aftermath of Friday’s release of nonfarm payrolls data. This shift in sentiment drove investors towards assets with a higher risk profile, including equities.
Spot gold managed to climb by 0.4%, reaching $2,310.05 per ounce, while gold futures slated for expiration in June also experienced a 0.4% increase, settling at $2,318.70 per ounce by 00:31 ET (04:31 GMT).
The resurgence in gold prices followed a recent decline from its record highs over the preceding three weeks. Notably, concerns regarding sustained high interest rates and dwindling demand for safe-haven assets exerted significant pressure on gold during recent trading sessions.
Nevertheless, the precious metal found some respite in the weakening dollar, which registered a 0.8% decline throughout the preceding week. This decline in the dollar was predominantly fueled by Friday’s payrolls report, which catalyzed a surge in expectations regarding potential rate cuts by the Federal Reserve, potentially commencing as early as September.
While a cooling labor market presents a compelling argument for rate adjustments by the Fed, the primary point of contention remains anchored on the matter of persistent inflation. Notably, inflation was observed to surpass the Federal Reserve’s annual target of 2% during the first quarter, consequently prompting traders to recalibrate their expectations regarding rate adjustments for the current year.
Elevated interest rates typically cast a shadow over gold, given their propensity to amplify the opportunity cost associated with investing in the precious metal.
The focal point for the week centers around a series of speeches from prominent Federal Reserve officials, poised to provide additional insights into the trajectory of interest rates.
In contrast, the performance of other precious metals proved to be somewhat mixed on Monday. Platinum futures experienced a decline of 0.3%, reaching $962.60 per ounce, while silver futures witnessed a notable surge of 1.7%, settling at $27.130 per ounce.
Meanwhile, within the realm of industrial metals, copper prices observed an upward trajectory on Monday, gravitating towards two-year highs amidst the backdrop of a weaker dollar.
Three-month copper futures on the London Metal Exchange surged by 1.7%, reaching $9,930.0 per ton, while one-month copper futures recorded a more moderate increase of 0.5%, reaching $4.5888 per pound.
Both contracts remained within striking distance of their two-year peaks, driven by anticipations of tightening markets following metal sanctions against Russia, alongside hopes of burgeoning demand from China, a top importer of the commodity.