U.S. labor market exhibiting gradual deceleration
U.S. nonfarm payrolls (NFP) report anticipated on Friday
Gold could escalate to $2,400 if NFP corroborates economic fissures – analyst
On Thursday, gold prices ascended following underwhelming U.S. economic data, which bolstered expectations that the Federal Reserve might reduce interest rates as early as September.
Spot gold GOLD increased by 0.3% to $2,362.10 per ounce as of 0200 GMT, after reaching a near two-week peak in the preceding session. U.S. gold futures GOLD remained relatively stable at $2,369.80.
Wednesday’s U.S. economic reports, including lackluster services and ADP employment data, indicated a decelerating economy. Another report revealed a rise in initial claims for U.S. unemployment benefits last week.
Market participants are now focused on the upcoming U.S. nonfarm payrolls (NFP) data, scheduled for Friday.
“A softer-than-anticipated ISM services report was the boon that Fed doves had been awaiting ahead of the NFP. A surge to $2,400 is plausible if the NFP substantiates the economic cracks observed elsewhere,” stated Matt Simpson, senior analyst at City Index.
“I doubt the U.S. dollar index will reattempt 106 anytime soon, so we expect traders to fade into dollar bounces and acquire gold on dips.”
The dollar was retreating, rendering greenback-priced bullion more affordable for holders of other currencies.
According to the CME FedWatch Tool, markets are now pricing in a 74% probability of the Fed reducing interest rates at its September meeting.
Lower rates diminish the opportunity cost of possessing non-yielding gold.
Meanwhile, Fed officials in their last meeting acknowledged that the U.S. economy appeared to be slowing but still advised a cautious approach before committing to rate cuts, according to minutes from the June 11-12 session.