Global gold prices fell during these moments of trading on Monday, as investors await the release of US inflation data this week to strengthen their bets on the size of the potential interest rate cut by the Federal Reserve.
Key data this week includes the US Consumer Price Index (CPI) for August due on Wednesday, followed by the Producer Price Index (PPI) on Thursday.
“Gold appears to be holding near the $2,500 level ahead of a key CPI data event this week, and if the data comes in below expectations, it will add strength to gold,” said Tim Waterer, chief market analyst at KCM Trade.
Waterer added: “Support in the $2,470-2,480 range has limited the downside in gold, so this will be a key range to watch if gold comes under selling pressure.”
A low interest rate environment typically enhances the appeal of non-yielding gold.
Interest rate futures traders now see a 69% chance of a 25 basis point rate cut at the Fed’s September 17-18 meeting, and a 31% chance of a 50 basis point cut, according to the Investing Saudi Arabia U.S. Rate Tracker tool.
Data on Friday showed that U.S. employment growth was lower than expected in August. Nonfarm payrolls in the United States rose by 142,000 jobs in August, from 89,000 jobs in July but below expectations of 161,000 jobs. The previous two months saw significant downward revisions, raising concerns about the extent of expected monetary easing.
However, the unemployment rate has fallen to 4.2%, indicating that the labor market is not in such a state that it would be necessary to cut interest rates by half a percentage point.
New York Federal Reserve President John Williams said inflation is falling steadily toward the U.S. central bank's 2% target and that now is the time to cut interest rates.
Consumer prices in China, a major metals consumer, also accelerated in August, while producer price deflation worsened, as Beijing continues efforts to revive domestic demand.
Gold at settlement on Friday
Gold prices turned lower during trading on Friday, as the dollar rose, amid assessments of the release of economic data on the US labor market.
At the settlement of transactions, the prices of gold futures contracts for December delivery fell by 0.75%, or $18.5, to $2,524.60 per ounce, as the yellow metal continued its losses for the second week, after declining by 0.1% since the beginning of the week.
Gold and dollar now
Spot gold is now down 0.34% at $2,489 per ounce.
Meanwhile, US gold futures rose 0.26% to $2,518.
On the other hand, the dollar index rose by about 0.2% to 101.34 points.
Other minerals
Spot silver rose 0.3% to $27.99 an ounce, platinum rose 1% to $930.75 and palladium rose 0.7% to $916.90.
