Dollar and Yields Dip Before US Jobs Data, Gold Shines

8 Feb 2024 , 11:57 AM

Ahead of the weekly unemployment claims data, which may offer new information on when the US Federal Reserve will begin cutting interest rates, gold prices increased slightly on Thursday thanks to a weaker dollar and lower Treasury yields.

Spot gold was up 0.2% at $2,037.80 an ounce. Futures for US gold increased by 0.1% to $2,053.10 an ounce.

Other currency investors found non-yielding bullion more enticing as the dollar index dropped 0.1% and the yield on benchmark 10-year Treasury notes dropped to 4.0921%. 

Due at 1330 GMT, investors will be closely observing the U.S. weekly jobless claims data. This is because the labour market continued to show signs of resilience last week when the monthly non-farm payrolls report came in stronger than anticipated.

Moody’s downgraded New York Community Bancorp to junk, citing pressure on its funding and liquidity, indicating that the U.S. regional banking sector remains a worry.

Even if losses were limited, the KBW regional banking index finished lower and has already dropped more than 5% this month.

Fed officials stated that they are not in a rush to begin relaxing policy anytime soon or to act swiftly once they do, and that they would prefer to wait to lower interest rates until they are more certain that inflation will decline to 2%.

The opportunity cost of storing bullion is reduced by lower rates.

January saw a fourth month of declines in both producer and consumer prices in China, highlighting the deflationary dangers facing the world’s second-biggest economy as it attempts to construct a robust rebound.

Spot silver increased by 0.2% to $22.23 per ounce, while palladium fell by 0.2% to $893.31, a five-year low. Platinum was unchanged at $879.59.

For feedback and suggestions, write to us at [e-mail]