Gold up 1% after US jobs data lifts Fed rate cut bets: 5 key reasons behind yellow metal’s appeal in 2024; Time to buy?

Gold rose 1% on Thursday after new data from the Labor Department indicated that the number of Americans filing new jobless claims rose more than expected last week, bolstering bets that the Federal Reserve will cut interest rates later in the year.

Spot gold was up 0.95% at $2,330.51 an ounce by 1414 GMT. U.S. gold futures for June delivery rose 0.74% to $2,339.40 an ounce.

The US dollar index fell 0.17% to 105.363.

Initial claims for state unemployment benefits rose 22,000 to a seasonally adjusted 231,000 in the week ended May 4, the Labor Department reported on Thursday, compared with the 215,000 claims economists polled by Reuters had forecast in the latest week.

The dollar slipped against its rivals after the jobs report, which pushed gold lower for holders of other currencies.

“What we’re seeing is the impact of expectations of a Fed rate cut, or when that rate may be cut,” said David Meagher, director of alternative investing and trading at High Ridge Futures.

The latest data indicated little weakness in the jobs market, bolstering expectations that the Fed may cut interest rates sooner than previously expected, supporting markets such as gold and silver, he added.

Lower interest rates reduce the opportunity cost of holding bullion. Traders are currently pricing in about a 67% chance of a Fed rate cut in September, according to CME’s FedWatch tool.

“The lack of US jobs data … gave gold some strength here, and some safety buying this morning,” said Bob Haberkorn, senior market strategist at RJO Futures.

Looking ahead, investors’ attention will shift to consumer price index data scheduled for release next week.

Spot silver rose 2.9% to $28.136 an ounce, and spot platinum rose about 1.1% to $982.25 an ounce. Spot palladium rose 1.6% to $967.28 an ounce.

(Reporting by Kavya Balraman, Editing by Franklin Paul)

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Published: 09 May 2024, 10:58 PM IST

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