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Gold steady as focus turns to U.S. data

June 4, 2024

Key points:

  • Gold prices hold steady at $2,347.48 per ounce.
  • Investors await key U.S. economic data this week.

Gold prices were flat in early Asian trading on Tuesday after a sharp gain in the previous session. Investors are bracing for U.S. economic data due later in the week, which could offer more clues to the Federal Reserve’s interest rate path.

Picture: Gold prices trading at 2345.28 as seen on the VT Markets app.

Spot gold was unchanged at $2,347.48 per ounce as of 0124 GMT, following a 1% gain on Monday. U.S. gold futures edged down 0.1% to $2,367.70. The dollar index ticked down about 0.1% against a basket of currencies, making bullion more attractive for foreign currency holders.

U.S. economic indicators signal slowdown in manufacturing and construction

Recent data showed U.S. manufacturing activity slowed for a second straight month in May. Additionally, U.S. construction spending fell unexpectedly for a second consecutive month in April, driven by declines in non-residential activity. These indicators suggest a cooling economy.

Also read: Gold prices retrace as US dollar and treasury yields rise ahead of key inflation data

Market anticipation grows ahead of key U.S. jobs reports

Investors are awaiting the ADP employment report on Wednesday and non-farm payrolls data on Friday. These reports will provide insights into the U.S. economy’s health and whether it might deter the Fed from cutting rates in September. Current market sentiment suggests there is a growing expectation for a potential rate cut in the near future.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion. The Federal Reserve Bank of New York reported that underlying inflation pressures eased slightly in April. This data supports the potential for a rate cut.

Global central banks plan to continue increasing their exposure to gold, a trend that has helped the precious metal hit record highs this year. This sustained demand could provide ongoing support for gold prices.

Spot silver fell 0.4% to $30.63 per ounce, platinum was up 0.7% at $1,018.35, and palladium gained 1.3% to $929.38.

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