Gold Strengthens, Market Heeds Fed Signals
Gold prices strengthened on Friday (July 3rd) and are heading for their first weekly gain since May. The precious metal rose near US$4,200 per troy ounce and has gained around 2.2% this week.
Gold's gains came after market participants reduced expectations for a Federal Reserve interest rate hike. Weaker-than-expected US employment data led investors to believe the Fed is under less pressure to tighten monetary policy again.
Data released Thursday showed US hiring slowed sharply in June. This indicates that the labor market is still facing pressure, despite showing signs of strength in recent months. The swap market now rates the chance of a 25 basis point interest rate hike at the next Fed meeting at below 20%, down from around a third at the start of the week.
Positive sentiment for gold also came from falling oil prices. Energy prices had previously been a major driver of inflation concerns since the US-Iran conflict began. However, tanker flows through the Strait of Hormuz have begun to recover, while Saudi Arabia and the United Arab Emirates have resumed oil shipments from the Persian Gulf, approaching pre-war levels.
Meanwhile, the market is also closely monitoring efforts by US President Donald Trump and his allies to reshape the Federal Reserve. Concerns about the central bank's independence have previously fueled gold's rally, driven by the debasement trade theme: concerns about inflation, currency depreciation, and the rising debt burden of developed countries.
At 2:31 p.m. New York time, spot gold rose 1.3% to US$4,176.94 per troy ounce. Silver rose 2% to US$62.42 per troy ounce after rising 5% in the previous three sessions. Platinum and palladium also rallied, while the Bloomberg Dollar Index was flat after previously weakening 0.5%. (arl)
Source: Newsmaker.id
