Last Update: May 08, 2023, 23:43 IST
According to the CME’s FedWatch tool, markets see an 88% chance of the Fed holding rates at their current levels in June and a 33% chance of a rate cut in July. (Representative Image/AP)
Spot gold was up 0.6% at $2,028.42 an ounce, as of 11:45 a.m. EDT (1545 GMT). US gold futures rose 0.6% to $2,036.30
Gold rose on Monday, gaining some ground after retreating in the previous session and this week ahead of inflation data that could provide clues on the outlook for US interest rates.
Spot gold was up 0.6% at $2,028.42 an ounce, as of 11:45 a.m. EDT (1545 GMT). US gold futures rose 0.6% to $2,036.30.
“The markets are really discounting after last Friday’s payrolls report,” said Daniel Ghali, commodities strategist at TD Securities, referring to the selloff, which has reached a nearly 2% bottom from last week’s record high.
It showed an acceleration in US employment growth in April, pointing to a strengthening labor market.
Ghali said, however, that the bearish prospect was likely to make the market price in a future Fed rate cut, which should lead “discretionary traders to put their capital in gold.” When interest rates fall and there is less competition from other assets, non-yielding gold has more appeal to investors.
According to the CME’s FedWatch tool, markets see an 88% chance of the Fed holding rates at their current levels in June and a 33% chance of a rate cut in July.
Chicago Fed chief Austen Golsby said in an interview with Yahoo Finance that he was getting “vibes” that a credit squeeze was starting.
Later on Monday, the Fed’s loan officers survey could reveal how tight banks are getting tighter on credit after three US lenders failed in recent weeks.
“If regional banks’ woes come back into the spotlight, it could spark another move for this safe-haven asset,” said Han Tan, chief market analyst at Exinity.
Along with the US Consumer Price Index (CPI) on Wednesday, traders are also monitoring any developments around the debt ceiling.
Spot silver fell 0.1% to $25.63 an ounce, platinum rose 1.9% to $1,078.84, while palladium jumped nearly 5% to $1,563.95.
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