Rising dollar, Fed uncertainty weigh on gold prices

6 May 2024 , 09:05 AM

Early on Monday in the Asian session, gold prices decreased as the dollar strengthened and traders watched statements from many Federal Reserve officials for further indications regarding the timing of interest rate cuts in the United States.

Spot gold was down 0.3% at $2,294.97 an ounce. The gold futures dropped 0.3% to $2,301.00.

Buyers holding other currencies found bullion less appealing as the dollar index firmed by 0.1%.

U.S. employment growth slowed more than anticipated in April, according to data released on Friday, which supported predictions that the Fed will begin lowering interest rates later this year.

According to CME’s FedWatch Tool, markets are pricing a 67% possibility of a rate drop in the United States in September. Keeping bullion has a higher potential cost when interest rates are high.

Austan Goolsbee, president of the Chicago Fed, stated on Friday that the U.S. central bank ought to include the specific economic assumptions that underpin each policymaker’s interest-rate-path perspective in its quarterly “dot plot” of those views. John Williams, the president of the New York Fed Bank, stated that the 2% inflation objective is “critical” to the Fed’s attempts to attain price stability.

Despite a minor price adjustment, physical gold demand in India remained muted last week as buyers anticipated a far larger decline, while Chinese premiums decreased for the second consecutive week as a result of weak holiday demand.

Spot silver dropped 0.2% to $26.49 an ounce, palladium crept down 0.5% to $940.60, while platinum lost about 0.7% to $948.40.

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