Gold prices rise as the currency and rates drop in early trade

7 Aug 2023 , 10:45 AM

Gold prices increased on Monday as investors prepared for this week’s inflation test that might affect the Federal Reserve’s policy course. The slower-than-expected U.S. job growth report had previously knocked the dollar and bond yields off their recent highs.

Spot gold was stable at $1,942.33 per ounce, up from the session’s nearly three-week low. At $1,977.20, U.S. gold futures increased by 0.1%.

After the Labour Department’s employment report on Friday revealed that the U.S. economy added fewer jobs than anticipated in July, the benchmark 10-year Treasury yields dropped from November highs and the U.S. dollar index declined.

New signs that the labour market is cooling strengthened the argument that the recent interest rate increase by the U.S. central bank may have been the final one in its tightening cycle.

Data on U.S. consumer prices will be examined to determine whether more rate increases are required to control inflation. 

Non-yielding gold is frequently sought after as a secure investment against inflation, but it usually loses its lustre as interest rates rise.

The European Central Bank stated on Friday that the euro zone’s underlying inflation has likely reached its high and is showing signs of slowing, along with growth in other prices.

Last week, premiums on physical gold in China reached a nearly five-month high due to robust retail demand in the largest consumer, while the impact of falling local prices in India was partially offset by a lower rupee.

According to figures released by the central bank on Friday, Venezuela’s gold holdings decreased by eight metric tons in the first half of the year, continuing a trend of years-long declines during a protracted economic crisis.

Platinum increased by 0.2% to $923.75 while spot silver fell by 0.1% to $23.57 per ounce. Up 0.5% to $1,262.31, palladium.

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