Gold Shines as Rate Cut Hopes Rise

4 Jul 2024 , 09:18 AM

Gold prices rose on Thursday as softer-than-expected US economic data fueled speculation that the Federal Reserve could slash interest rates as early as September.

Spot gold was up 0.3% at $2,362.10 per ounce, having set a near two-week high the previous session. Gold futures were barely changed at $2,369.80.

On Wednesday, U.S. economic statistics, particularly dismal services and ADP job numbers, suggested that the economy is weakening. A separate survey showed that there was a rise in initial applications for unemployment benefits in the United States last week.

Traders are now anticipating U.S. nonfarm payrolls (NFP) data, which is scheduled for release Friday.

The dollar was weak, making greenback-priced bullion cheaper for other currency holders.

According to the CME FedWatch Tool, markets now expect the Fed to decrease interest rates at its September meeting by 74%.

Lower rates lower the opportunity cost of owning non-yielding gold.

Meanwhile, Fed officials agreed at their last meeting that the U.S. economy appeared to be slowing but advised a wait-and-see strategy before committing to rate decreases, according to meeting minutes from June 11-12.

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