“International spot and domestic gold and silver futures closed at their highest since May on Friday as weak US economic data pressured the dollar and raised expectations of an interest rate cut by the Federal Reserve. US Treasury yields also fell on Friday, supporting bullion. Official data on Friday showed the US created 2,06,000 new jobs in June, better than expected,” said Sriram Iyer, senior research analyst at Reliance Securities.
“However, the data also showed that 111,000 fewer jobs were created in May and April than initially reported, and the unemployment rate rose to 4.1% for the first time since November 2021. The data clearly shows that the Fed faces a major challenge as the economy continues to deteriorate and the risk of a US recession may increase, providing support for gold.”
“From an intraday perspective, international gold prices opened slightly lower in early Asian trading on Monday due to a possible technical correction. However, the decline may be limited by rising expectations of an early interest rate cut by the Federal Reserve following weak US economic data. The market is currently pricing in around a 78% chance of the Fed starting to cut rates in September and is also pricing in expectations of a second rate cut by the end of the year,” Iyer said.
The main catalyst this week will be the release of the Consumer Price Index (CPI) and Producer Price Index (PPI) for June, followed by Federal Reserve Chairman Powell’s semi-annual testimony on monetary policy before the Senate Banking Committee.
