Gold Steady at 10-Day High Amid Rate Cut Bets, Nonfarm Payrolls Awaited

Gold prices held firm near a 10-day peak in Asian trading on Thursday, buoyed by increasing expectations of interest rate cuts by the Federal Reserve, which weakened the dollar and Treasury yields. However, the precious metal’s gains were tempered by hawkish signals from the Fed’s June meeting minutes and cautious sentiment ahead of the crucial U.S. nonfarm payrolls report.

Spot gold saw a marginal increase of 0.1% to $2,359.56 an ounce, while gold futures experienced a slight dip of 0.1% to $2,367.15 an ounce.

Rate Cut Optimism Boosts Gold, But Caution Prevails

Gold rallied on Wednesday, tracking the dollar’s decline as traders heightened their bets on a September rate cut. This optimism stemmed from weaker-than-expected ADP employment data and a soft reading on non-manufacturing activity, indicating a cooling U.S. economy.

Traders now price in a greater than 68% probability of a 25 basis point cut in September, according to the CME Fedwatch tool, up from 59% the day before. Lower interest rates typically benefit non-yielding assets like gold, as they diminish the attractiveness of Treasuries and the dollar.

However, hawkish signals from the Fed’s June meeting minutes, suggesting policymakers remain hesitant about lowering borrowing costs, tempered the enthusiasm. Additionally, caution prevailed in anticipation of the upcoming nonfarm payrolls data, which has consistently exceeded expectations in recent months. Improved risk appetite also led some traders to favor assets such as stocks and currencies over gold.

Mixed Performance in Other Precious Metals

Other precious metals experienced mixed results. Platinum futures saw a 0.7% increase to $1,019.40 an ounce, while silver futures declined 0.5% to $30.70 an ounce. Notably, silver has outperformed gold significantly over the past year.

Copper Prices Muted Amid Conflicting Economic Signals

In the industrial metals sector, copper prices remained subdued despite gaining some ground on a weaker dollar. However, the gains were limited by signs of a slowing U.S. economy and weak signals from China, a major copper consumer.

Benchmark copper futures on the London Metal Exchange dipped 0.2% to $9,849.0 a tonne, and one-month copper futures fell 0.1% to $4.5255 a pound. Both contracts had experienced substantial losses in June due to souring sentiment towards China and concerns about global economic growth, factors that negatively impact copper demand.

Overall, gold’s price remains steady near a 10-day high, driven by rate cut expectations but tempered by cautious sentiment ahead of key economic data. Other precious metals and industrial metals like copper experienced mixed performance amid conflicting economic cues.