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Gold Prices Fall on Strong U.S. Jobs Data; Rate Cut Expectations Eased

5 Oct 2024 10:33 am
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Mumbai, 5 Oct (Commoditiescontrol): Gold prices fell on Friday as a stronger-than-expected U.S. jobs report strengthened the dollar and led to diminished expectations of a significant interest rate cut by the Federal Reserve.

Spot gold dropped 0.6% to $2,640.61 per ounce, retreating from a record high of $2,685.42 reached last week. U.S. gold futures also declined 0.7% to settle at $2,660.90.

September's robust U.S. employment data, with job growth accelerating and the unemployment rate dipping to 4.1%, eased the pressure on the Federal Reserve to implement an aggressive 50-basis-point rate cut at its upcoming policy meeting on November 6-7. As a result, market analysts are now predicting a more modest 25-basis-point cut.

The strong payroll report is likely to secure a 25bps rate cut in November, a trader noted, adding that the upward revisions to previous months' data were notable, alongside a lower unemployment rate despite stable participation levels.

The U.S. dollar index surged following the jobs data, setting it up for a weekly gain. A stronger dollar tends to weigh on gold prices, as it makes the precious metal more expensive for foreign buyers.

Traders responded to the data by scaling back the likelihood of a 50-basis-point rate cut in November, with expectations dropping to 11%, down from 28% prior to the payroll report.

Despite Friday's decline, gold could rebound if geopolitical tensions escalate. Analysts speculated that if geopolitical factors, such as Iran's recent response to Israeli actions in Beirut, intensify, gold could surpass $2,700 and test new record highs. Iran's Supreme Leader Ayatollah Ali Khamenei stated that his country and its allies would not retreat following the Israeli attack.

Gold remains a preferred safe-haven asset during periods of political and economic uncertainty and performs well in low-interest-rate environments.

Meanwhile, retail demand for gold in India saw a slight uptick ahead of an upcoming festival, although high prices kept demand below usual levels.

In other metals, spot silver fell 0.9% to $31.74 but was still on track for a weekly gain. Platinum rose 0.3% to $993.40, and palladium advanced 0.4% to $1,004.00.

(By Commoditiescontrol Bureau: 09820130172)


       
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