Gold prices dipped in early Asian trade on Monday, May 6th, as the US dollar strengthened. Investors are closely watching upcoming comments from Federal Reserve officials for clues on the expected timeline for interest rate cuts.
Spot gold fell 0.3% to $2,294.97 per ounce, mirroring a slight uptick in the dollar index, which makes gold less appealing for those holding other currencies. U.S. gold futures also dipped slightly, down 0.3% to $2,301.00 per ounce.
This price movement comes after data released on Friday showed weaker-than-expected US job growth in April. This data reinforces market expectations that the Fed will begin cutting interest rates later in 2024.
Currently, markets predict a 67% chance of a rate cut in September, according to the CME’s FedWatch Tool. Higher interest rates tend to decrease the attractiveness of holding gold, as it offers no fixed return.
Several Fed officials are scheduled to speak this week, and investors are waiting for any indications on the direction of future monetary policy.
Austan Goolsbee, president of the Chicago Fed, suggested the central bank should provide more detailed information on the economic forecasts guiding individual policymakers’ interest rate projections.
Meanwhile, New York Fed President John Williams reiterated the significance of the 2% inflation target for achieving price stability.
While gold prices softened, physical demand in India remained subdued.
Buyers are holding off on purchases, anticipating further price declines. In China, gold premiums also slipped for the second consecutive week due to sluggish demand during the holiday period.
The broader precious metals market displayed a similar trend. Spot silver dipped 0.2%, platinum fell nearly 0.7%, and palladium edged down 0.5%.