Gold Holds Above US$4,300, CPI Becomes the Next Test
Gold prices remained above US$4,300 per ounce on Monday. After surging more than 7% last week — its strongest weekly gain since late January — the precious metal moved more cautiously as some investors took profits.
The main support continued to come from weaker U.S. labor market data. July Nonfarm Payrolls showed a decline in employment, while figures for the previous two months were also revised lower. The weaker jobs picture encouraged markets to reduce expectations for a near-term Federal Reserve rate hike.
The softer labor data also pushed the U.S. dollar lower by around 0.4% on Friday, helping gold prices climb. Lower interest-rate expectations generally support gold because they reduce the opportunity cost of holding a non-yielding asset. Investors are now turning their attention to U.S. inflation data due this week for further clues on the Fed’s policy outlook.
Investor demand for gold also remains strong. Hedge funds and money managers increased bullish positions to their highest level in more than six months. Gold-backed ETFs in China also recorded further inflows, showing that investors remain willing to buy the metal on price dips.
China’s central bank added around 640,000 ounces of gold to its reserves in July, marking the 21st consecutive month of purchases. However, geopolitical risks remain elevated as Iran and Oman have yet to reach a final agreement on the Strait of Hormuz, while Houthi-related tensions continue to threaten regional stability.
Source : Newsmaker.id
