Precious metals stabilize as markets await US inflation data, Federal Reserve decision

(MENAFN) Gold prices remained stable in early trading on Monday, hovering just below the USD2,500 mark per ounce. Investors are cautiously waiting for the release of August inflation data, which is expected to provide more clarity on whether the Federal Reserve will move forward with an anticipated interest rate cut later this month. As of 0021 GMT, spot gold was little changed at USD2,497.53 per ounce, while U.S. gold futures experienced a slight increase, up by 0.1 percent to USD2,526.40. The gold market's steadiness reflects the uncertainty over the Federal Reserve's next steps as traders await key economic data that could influence monetary policy decisions.

Recent data showed that the U.S. economy added 142,000 nonfarm payroll jobs in August, falling short of economists’ expectations of 160,000 jobs, according to a poll. Additionally, July’s job growth figures were revised downward to 89,000, signaling a potential slowdown in the labor market. The unemployment rate for August stood at 4.2 percent, meeting market expectations but showing a slight decrease from the 4.3 percent rate recorded in July. In light of these mixed signals, Federal Reserve officials have indicated a readiness to initiate a series of interest rate cuts during their upcoming meeting in two weeks. Current market sentiment suggests a possible quarter-point reduction, with a more substantial cut possible if further signs of labor market weakness emerge. The CME Group's FedWatch tool shows a 71 percent probability that the Fed will reduce rates by 25 basis points at its September 17-18 meeting, while there remains a 29 percent likelihood of a more aggressive 50 basis-point cut.

In the broader precious metals market, other key commodities showed modest gains. Spot silver rose by 0.3 percent to USD28.01 per ounce, while platinum also climbed 0.3 percent to reach USD924.02 per ounce. Palladium saw the largest increase, rising nearly 1 percent to USD919.76 per ounce. The prospect of lower interest rates, which decrease the opportunity cost of holding non-yielding assets like gold, is contributing to steady demand for precious metals. As the market closely monitors upcoming economic data, these movements highlight the delicate balance investors are maintaining amidst shifting monetary policy expectations.

MENAFN09092024000045015682ID1108651031