Gold price stabilized near a two-week high on Friday, surpassing crucial levels as persistent expectations of Federal Reserve interest rate cuts exerted pressure on the dollar. The upcoming release of nonfarm payrolls data is anticipated to provide further insights later in the day.
Despite signals from the Fed indicating a delay in expected interest rate cuts this year, the precious metal largely shrugged off this information, capitalizing on the dollar’s decline and inching closer to 2024 peaks.
However, gold price gains moderated on Friday as the market adopted a cautious stance ahead of the payrolls data, which is expected to influence the Fed’s decisions on interest rates.
Spot gold price inched up 0.1% to $2,056.20 per ounce, surpassing the $2,050 threshold for the first time in two weeks, while March gold futures price increased by 0.1% to $2,073.35 per ounce by 00:47 ET (05:47 GMT). Both registered approximately a 1.9% gain for the week, aiming to break a two-week losing streak.
Gold’s rebound follows a challenging start to 2024, during which the precious metal declined by 1.2%, aligning with the market’s gradual adjustment of expectations for a March interest rate cut.
Market expectations lean towards a rate cut in May as payrolls data looms
Despite the Federal Reserve downplaying the likelihood of a rate cut in March, the CME Fedwatch tool indicates that traders are now factoring in the potential for a 25 basis point cut in May, contributing to an uptick in bullion prices.
Goldman Sachs analysts anticipate the central bank to implement at least four more rate cuts following May. While current U.S. rates are anticipated to remain elevated in the short term, the indication of a future rate decline, as mentioned by Fed Chair Jerome Powell earlier in the week, supports positive prospects for bullion prices.
However, the Fed has not provided a clear indication regarding the timing and extent of the planned rate cuts, emphasizing a data-driven approach. The upcoming nonfarm payrolls data on Friday is expected to significantly influence the Fed’s perspective, with the central bank signaling that a cooling labor market will be a factor in any decision to cut interest rates.
The data for Friday is anticipated to reveal a modest cooling in the labor market for January, although historical trends suggest that the readings often surpass expectations.
Copper prices experience a decline, heading towards weekly losses due to concerns related to China
In the realm of industrial metals, copper prices decreased on Friday and were on track to finish the week lower, primarily due to ongoing worries about a sluggish economic rebound in China, a key importer.
Copper futures expiring in March dropped by 0.5% to $3.8342 per pound, reflecting a 0.3% decline for the week.
The decrease in copper prices was predominantly influenced by disappointing purchasing managers index data from China. Official data indicated that manufacturing activity continued to contract in January, raising apprehensions about a potential slowdown in demand within the country.
According to Investing.com
By . Pham Thanh Bien
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