Gold prices fall after hitting near record high amid uncertain expectations of interest rate cuts
(MENAFN) Gold prices saw a notable drop on Friday after briefly approaching an all-time high earlier in the session, driven by mixed U.S. jobs data that cast uncertainty over the extent of a potential interest rate cut by the Federal Reserve this month. Spot gold fell by 0.8 percent to USD2,495.86 per ounce by 1759 GMT, retreating after reaching its highest level since August 20, when it previously hit a record peak. Meanwhile, U.S. gold futures also slipped, declining by 0.7 percent to close at USD2,524.60. The decline came amid investor caution following the release of a U.S. labor Department report showing that non-farm employment in August increased by 142,000 jobs, falling short of economists' forecasts of 160,000 jobs. The report also revealed a downward revision of July's job growth to 89,000, further dampening market sentiment.
The unemployment rate in August aligned with market expectations, standing at 4.2 percent, a slight decrease from 4.3 percent in the previous month. However, the mixed signals from the labor market report fueled uncertainty over the Federal Reserve's next move on interest rates. According to the CME Group's FedWatch tool, there is now a 73 percent probability that the Federal Reserve will opt for a 25 basis point cut at its upcoming meeting, while a 27 percent chance remains for a more aggressive 50 basis point reduction. Lower interest rates are generally supportive for gold, as they reduce the opportunity cost of holding the non-yielding asset, but the current ambiguity surrounding the Fed's decision has created a more cautious trading environment.
In addition to gold, other precious metals also experienced declines. Silver fell sharply by 3.1 percent in spot transactions to USD27.92 per ounce. Platinum also edged down by 0.4 percent, settling at USD920.55, while palladium mirrored silver's decline, dropping by 3.1 percent to USD913 per ounce. The broader downturn in precious metals reflects a cautious market mood as traders await clearer signals from the Federal Reserve regarding its monetary policy path amid mixed economic indicators.
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