Gold prices fall after hitting record highs amid shifting expectations of federal interest rate cut
(MENAFN) Gold prices declined on Friday after briefly approaching a record high earlier in the session, as uncertainty about the extent of a potential interest rate cut by the Federal Reserve later this month weighed on the market. Spot gold fell by 0.3 percent to USD2,509.35 per ounce by 1421 GMT, retreating from its peak since August 20. In contrast, U.S. gold futures increased slightly by 0.2 percent, reaching USD2,538.90. The decline in gold prices came after a U.S. labor Department report revealed that non-farm employment in August rose by approximately 142,000 jobs, falling short of economists’ expectations of 160,000 jobs. Additionally, July's job figures were revised downward to 89,000. The unemployment rate remained steady at 4.2 percent, aligning with expectations but down from 4.3 percent in the previous month.
The data influenced expectations for the Federal Reserve's upcoming interest rate decision, as indicated by the CME Group's FedWatch tool. Traders now assign a 59 percent probability to a 25 basis point rate cut on September 18, down from about 70 percent a week ago, while the likelihood of a more substantial 50 basis point cut increased to 41 percent from 30 percent previously. Lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold. In the broader precious metals market, silver saw a decrease of 0.6 percent to USD28.65 per ounce, while platinum rose by 0.5 percent to USD929. Palladium, on the other hand, fell by 0.2 percent to USD938.75.
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