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Gold prices held steady in Asian trading on Thursday, following three consecutive days of gains. Investors adopted a cautious stance as they awaited key U.S. payroll data, which is expected to provide further insight into the Federal Reserve’s future policy actions.
Gold Supported by U.S. Fiscal Deficit Concerns
Spot gold remained largely unchanged at $3,352.75 an ounce, while gold futures for August saw a modest 0.1% increase to $3,363.70/oz by 01:43 ET (05:43 GMT). Gold has gained nearly 2.5% this week, recovering much of the ground lost in the previous week. The precious metal continues to find support from ongoing concerns about the U.S. fiscal deficit, particularly as House Republicans push for the passage of President Donald Trump’s expansive tax-cut bill.
The sweeping tax bill is projected to add $3.3 trillion to the national debt over the next decade, which has heightened fears about long-term fiscal stability. This uncertainty has led to a more favorable environment for safe-haven assets such as gold.
Trade Deal Uncertainty Adds to Gold’s Appeal
Gold’s appeal has also been supported by the ongoing uncertainty surrounding U.S. trade deals, particularly with the July 9 tariff deadline fast approaching. Despite some limited agreements, such as the U.K., China, and Vietnam trade deals, the threat of escalating tariffs looms large. President Trump has indicated that he has no intention of extending the July 9 deadline, intensifying concerns about the potential economic impact of a trade war. These geopolitical risks have bolstered demand for gold, a traditional safe haven during times of uncertainty.
U.S. Jobs Report to Impact Federal Reserve Policy Outlook
The primary focus this week is on the upcoming U.S. non-farm payrolls report, set to be released on Thursday. The data is expected to offer valuable insights into the trajectory of the U.S. economy and the Federal Reserve’s monetary policy.
Fed Chair Jerome Powell’s recent comments have been perceived as dovish, with Powell not ruling out the possibility of a rate cut as early as next month. While a September rate cut is largely priced in, the market is speculating that the Fed could move more quickly, given recent soft inflation data and signs of a slowdown in the U.S. economy. Additionally, President Trump’s threat to replace Powell has added further fuel to expectations of more aggressive policy easing, especially after Trump’s repeated calls for immediate rate cuts.
This dovish sentiment surrounding the Fed has placed downward pressure on the U.S. dollar, which has boosted gold prices. A weaker dollar makes gold more affordable for holders of other currencies, contributing to the metal’s rise.
Mixed Performance in Other Metals
While gold held steady, other metals in the broader commodity market saw mixed performance. The U.S. Dollar Index rose slightly by 0.1% during Asian trading hours but remained near its lowest level since February 2022.
Silver futures were largely muted, trading at $36.455 per ounce, while platinum futures fell 1.2% to $1,417.80. Meanwhile, copper futures on the London Metal Exchange edged 0.2% lower to $9,989.65 per ton, though U.S. copper futures rose by 0.6% to $5.187 per pound.
Conclusion
Gold remains supported by ongoing fiscal and trade uncertainties, as well as speculation surrounding U.S. monetary policy. As investors await Thursday’s non-farm payrolls data, the precious metal is likely to continue benefiting from safe-haven demand. Meanwhile, the U.S. tax-cut bill and the looming July 9 tariff deadline continue to add to gold’s appeal. Investors will closely monitor these developments for further cues on the global economic outlook and the Federal Reserve’s next move.
