Bullion: Gold Rises Amid NFP Data Expectations

Prices of gold were higher on Friday and treaded towards a seventh consecutive weekly gain. Investors were anticipating U.S. jobs data that could impact Federal Reserve rate-cuts expectations.

Spot gold inched 0.2% higher at $1,418.25 per ounce as of writing and has had a weekly gain of nearly 0.7% so far. U.S. gold futures were flat at $1,420.80 an ounce.

“We have a key event tonight for the global economy that is U.S. nonfarm payrolls numbers. If they come in weaker than expected, we will see confirmation of one of the key supports for gold that is lower interest rate environment,” said Michael McCarthy, an analyst at a forex company.

Eyes are currently fixated on the U.S. nonfarm payrolls (NFP) set to be released later today. Economists estimate that the data to be disclosed will show that the NFP has risen by 160,000 in June in hopes to recover from the disappointing 75,000 in May.

The Fed will conduct its policy meeting on July 30-31 and futures are settling in full prices with a 25-basis point cut.

The Fed is not unaccompanied in the move to ease monetary policies. The Reserve Bank of Australia (RBA) has cut its cash rate by 50 basis points and made history by stepping into the low 1% level.

Stephen Innes, another analyst, said, “Gold should do well coming out of NFP as one positive payroll print should not change the sense of urgency central banks around the world must feel.”

Bullion increased more than 12% since it touched its low of $1,265.85 this year in early May as the outlook from central banks become dovish, and tensions escalate between the U.S. and Iran.

Lower interest rates reduce the opportunity cost of holding onto non-yielding bullion, making gold inexpensive for investors who partake in other currency-positions.

Rate-Cuts Bolster Precious Metals

In an environment where interest rates are falling, investors’ desires to take hold of positions on gold get bolstered compared to other assets such as bonds and currencies.

The dollar index was relatively flat after the U.S. financial markets were closed for a holiday.

However, the greenback was steady after a three-day drop amid the news of U.S. President Donald Trump accusing both Europe and China of manipulating currencies in order to gain an advantage in trades.

He also, before, lambasted the Federal Reserve for not cutting interest rates.

Following the weak unemployment data, the Fed, however, is expected to cut the rate by the end of the month finally.

But the Fed is not the only central bank anticipated to implement more comfortable monetary policy measures.

Sentiments regarding IMF director Christine Lagarde, who was recently nominated to succeed current ECB president Mario Draghi, could share his same liking to the pursuance of innovative and market-friendly policies, supporting gold and bullion prices.

Gold prices have recently bagged their largest monthly gain since 2016 as said Fed rate-cut anticipations strengthen them.

Elsewhere in the precious-metals scene, silver inched 0.1% lesser to $15.27 per ounce, while platinum was 0.3% increased to $835.15.

Palladium was neutral at $1,561.20 an ounce and was running towards its fifth straight weekly gain.