Gold prices experienced a slight downturn on Monday, despite weak U.S. employment data fueling expectations of a potential interest rate cut by the Federal Reserve. Investors are now eagerly awaiting the release of the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI), poised to gauge their influence on economic sentiment and interest rate decisions.
In the United Arab Emirates (UAE), gold prices followed suit with a dip in value. The price of 24-carat gold slipped to AED285.25 per gram, while 22-carat gold fell to AED264. Similarly, 21-carat gold recorded AED255.75, and 18-carat gold reached AED219.25.
Internationally, spot gold witnessed a decline of 0.28 percent, resting at $2,353.91 per ounce as of 5:22 GMT, after hitting a peak exceeding two weeks last week. Simultaneously, U.S. gold futures saw a decrease of 0.64 percent, reaching $2,359.75.
U.S. Economic Outlook
Last week’s unveiling of U.S. employment figures contributed to the buoyancy in gold prices, which soared over 2 percent by week’s end. The surge came as the number of Americans filing new unemployment claims surpassed expectations, igniting concerns about a potentially cooling labor market. This development has fortified anticipations of an interest rate reduction by the Federal Reserve, possibly as early as September.
However, the imminent release of U.S. CPI and PPI data this week has stirred both apprehension and speculation regarding future rate adjustments. Should the CPI data indicate a drop in inflation amid softening labor market conditions, it could further solidify expectations of an impending rate cut. Consequently, reduced interest rates diminish the opportunity cost associated with holding gold.
Global Dynamics
The trajectory of gold prices continues to be molded by geopolitical and economic events worldwide. Recent escalations in Middle Eastern conflicts and improving economic indicators in China wield substantial influence over gold demand. In China, consumer prices have seen a consecutive monthly uptick, juxtaposed with a decline in producer prices in April, signaling an uptick in domestic demand.
Other Precious Metals
Echoing the trend in gold prices, other precious metals also experienced declines on Monday. Spot silver saw a decrease of 0.43 percent, resting at $28.03 per ounce, while platinum fell by 0.08 percent to $993.40. Similarly, palladium registered a slight decrease of 0.03 percent, reaching $977.43.