By Ashitha Shivaprasad
BENGALURU- Gold prices eased on Monday but hovered near a more than one-month high scaled in the previous session, after softer US data boosted expectations of an interest rate cut by the Federal Reserve in September.
Spot gold was down 0.2 percent at $2,385.88 per ounce, after rising to its highest level since May 22 on Friday. US gold futures eased 0.1 percent to $2,394.50.
Data on Friday showed that the unemployment rate hit a 2-1/2-year high of 4.1 percent , pointing to a slackening labor market. Market focus this week is on Fed Chair Jerome Powell’s semi-annual Congressional testimony, comments from a series of Fed officials and US inflation data.
Friday’s weak jobs report helped gold prices enjoy best week in three months, a soft US inflation report and a dovish tone from Powell when he testifies looks like the ideal catalyst for gold to consider new highs, said Matt Simpson, a senior analyst at City Index.
Markets are expecting a 78 percent chance of a September rate by the Fed, according to CME’s Fedwatch Tool. Traders are also pricing in a rising chance of a second rate cut in December.
Lower rates reduce the opportunity cost of holding non-yielding bullion.
However, bullion prices were capped by news that top consumer China’s central bank refrained from gold purchases to its reserves for a second consecutive month in June.
“China may have paused their gold purchases, but it remains in demand overall. And that is likely to keep gold on bullish watchlists and tempt bullish bets upon any dips,” Simpson said.
Spot silver fell 0.2 percent to $31.14 after hitting a one-month peak in the last session. PLatinum edged 0.5 percent lower to $1,021.45 and palladium slipped 1.7 percent to $1,008.51. -Reuters
