(CTN News) – Gold prices experienced an increase on Thursday due to a decline in the value of the dollar and Treasury yields.
Investors are anxiously anticipating the publication of vital U.S. payroll information, as it has the potential to offer valuable insights into the Federal Reserve’s forthcoming interest rate determinations.
At 1155 GMT, spot gold rose by 0.4% to reach $2,032.90 per ounce. Meanwhile, U.S. gold futures saw a gain of 0.1% and reached $2,050.20.
Yields on 10-year Treasury notes remained close to a three-month low, while the U.S. dollar index (.DXY) fell by 0.3% against other currencies. This decline in the dollar’s value made gold more affordable for holders of other currencies.
Ole Hansen, the commodity strategy head at Saxo Bank, expressed concern about the possibility of too many rate cuts being priced in. He emphasized the importance of Friday’s job report in providing further clarity on the situation.
Recent data has indicated a gradual slowdown in the U.S. labor market, with job openings reaching their lowest point in two and a half years in October.
All eyes are now on the U.S. non-farm payrolls data, which will be released on Friday. This data will be crucial in shaping the Federal Reserve’s economic and interest rate projections at their upcoming policy meeting on December 12-13.
There has been a shift in sentiment among traders due to recent dovish remarks from Federal Reserve officials and disappointing economic data. This has led to increased expectations that the United States has reached its peak interest rates and that the central bank may start reducing rates in the early months of next year.
According to CME’s FedWatch Tool, traders are currently pricing in a 60% probability of a rate cut by March 2022. This anticipation of lower interest rates typically benefits non-interest-bearing assets like gold.
Craig Erlam, a senior markets analyst at OANDA, stated that the gold market is essentially in a holding pattern, awaiting significant U.S. data releases and the outcome of the Federal Reserve meeting before making its next significant move.