Gold Loses Luster in Early Trade

5 Aug 2024 , 10:40 AM

Gold prices fell on Monday due to profit-taking, although economic concerns and increased predictions of US interest rate reduction stopped additional losses.

Spot gold was down 0.1% at $2,439.94 per ounce. US gold futures increased 0.5% to $2,482.00.

Data released on Friday revealed that job growth in July fell short of expectations, with unemployment rising to 4.3%, pointing to potential labour market weakness and increased vulnerability to recession, bolstering the case for a rate decrease at the Federal Reserve’s September 17-18 meeting.

According to the CME FedWatch tool, traders are pricing in a more than 70% possibility that the US central bank would cut interest rates by 50 basis points in September, up from 11.5% a week ago.

Lower interest rates lower the opportunity cost of keeping non-yielding bullion.

In other markets, Asian share markets fell and bonds rallied as fears of a US recession fuelled widespread risk aversion.

Gold premiums in India fell last week as prices recovered, dampening a purchasing frenzy sparked by the government’s move to reduce import taxes, while declining consumer mood weighed on demand in top consumer China.

Elsewhere, the US military will send more fighter jets and Navy warships to the Middle East, the Pentagon announced on Friday, as Washington moves to strengthen defences in response to threats from Iran and its allies Hamas and Hezbollah.

Spot silver was unchanged at $28.55 per ounce; platinum sank 0.76% to $950.60; and palladium fell 0.8% to $884.73.

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