Gold Edges Higher as Fed Hike Bets Fade Amid Weaker US Jobs Data
Gold prices inched higher on Monday, following last week's positive momentum after weak US jobs data tempered expectations for Federal Reserve rate hikes. Spot gold was up 0.1 per cent at $4,345.09 per ounce, as of 0856 GMT.
The disappointing US nonfarm payrolls data led to a reduction in expectations for a Federal Reserve rate hike next month. Traders are now pricing a 44 per cent chance of a rate hike in September, compared to 57 per cent before the jobs report.
ActivTrades senior analyst Ricardo Evangelista said gold prices continue to benefit from last week's positive momentum, following the disappointing US jobs report and the resulting reduction in expectations of further Fed rate hikes. A lower interest rate environment boosts the attractiveness of gold against income-generating assets, as bullion earns no interest.
Investors are now awaiting US consumer price data due on Wednesday and producer price data on Thursday for further clues on the Fed's interest-rate outlook. Economists polled by Reuters expect the July consumer price index to have risen 3.4 per cent year-on-year, compared with 3.5 per cent in June.
A headline figure below the consensus forecast of 3.4 per cent could further reduce expectations of a Fed rate increase before the end of the year, weakening the dollar and creating upside potential for gold, according to Evangelista.