Gold Rises as Bond Yields Retreat, Focus Now on Jobs Data

Global gold prices rose during trading today, Thursday, as the dollar and Treasury yields fell amid growing bets that US interest rate cuts could start as early as next September, while investors await US nonfarm payroll data.

The dollar index is steady but hovering near its lowest levels in nearly two months, while 10-year US Treasury yields are near their weakest levels in over two months. The fundamentals still look good for gold as we approach potential Fed rate cuts in the second half of the year. “Although the $2300 level could come into question on the downside if we get a strong nonfarm payrolls number.”

Private sector job creation in the US fell to its lowest level in four months in May, adding to evidence of a slowing labor market. Markets are now looking to US Labor Department data on Friday for more clues. The Federal Reserve will cut its benchmark interest rate in September and again this year, according to a majority of forecasters in a Reuters poll.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Gold and the Dollar Now

Gold futures are now up 0.3% to $2383 an ounce. While spot gold is up about 0.4% to $2364 an ounce. On the other hand, the dollar index is steady at 104.195 points.

Other Metals

Silver spot rose 1.8% to $30.54 an ounce, platinum gained 1.2% to $1003.95, and palladium rose 1.2% to $942.75.

US Oil Inventories Issue Contrary to Expectations of a Decline

US oil inventory data has now been released showing an increase of more than a million barrels, while expectations were for a decline of around two million barrels. Energy Information Administration (EIA) data showed oil inventories rose 1.233 million barrels, versus expectations for a decline of around 2.100 million barrels, while the previous reading showed a decline of 4.156 million barrels.

Following the data release, Brent crude futures rose 0.45% to $77.80 a barrel, while US West Texas Intermediate (WTI) futures rose about 0.42% to $73.50 a barrel. Oil prices had edged up slightly earlier today, Wednesday, but remained near their lowest levels in four months as markets digested OPEC+’s decision to increase supplies later this year and following a rise in US crude and refined product inventories.

Both contracts fell about $1 on Tuesday to their lowest since early February, and have fallen about $3 a barrel since Monday. The decline comes after news from the Organization of the Petroleum Exporting Countries (OPEC) and its allies of plans to increase supplies from October despite recent signs of weak demand growth.

Nvidia Sets New Record, Paints Wall Street Green

The S&P 500 index was up during today’s trading, Wednesday, as shares of Nvidia (NASDAQ:NVDA) soared to a record high, leading major tech stocks higher. Weak labor market data also gave investors hope that the Federal Reserve may move to cut interest rates later this year.

The broad market index traded up 0.56%, while the Nasdaq Composite rose 1.17%. The Dow Jones Industrial Average fell 40 points or 0.1%. ADP private sector jobs data showed employment slowed to 152,000 jobs last month, well below the 173,000 economists had forecast. This data is the latest sign of weakness in the labor market that investors hope will give the Federal Reserve enough evidence to cut its benchmark interest rate.

As a result of this data, global gold prices rose significantly in the past few moments, despite the US dollar index maintaining its daily gains. The odds of the Federal Reserve cutting its current federal funds rate by 25 basis points at its September meeting increased, based on futures contracts traded on the Chicago Mercantile Exchange.

Meanwhile, the purchasing managers index (PMI) tracking business services rose more than expected to 53.8 versus analysts’ estimates of 51.0. Attention will now turn to weekly jobless claims figures on Thursday and the more important May jobs report on Friday.

In addition to Nvidia, other tech stocks led Wednesday’s gains. Shares of Hewlett Packard Enterprise (NYSE:HPE) rose more than 13% after second-quarter earnings beat analysts’ estimates. CrowdStrike (NASDAQ:CRWD) jumped 7% on stronger-than-expected earnings.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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