Gold prices declined on Monday after reaching over a one-month high in the previous session as investors raised their bets that the Federal Reserve will cut interest rates in September.
In the UAE, gold prices saw an AED0.5 decline with 24-carat gold inching down to AED288.75 per gram, while 22-carat gold declined to AED267.25. Twenty-one-carat gold was at AED258.75 while 18-carat gold reached AED221.75.
Globally, spot gold saw a 0.04 percent decline to $2,384.95 per ounce, as of 5:11 GMT. Meanwhile, U.S. gold futures were down 0.20 percent to $2,393.00.
The dollar index saw a slight recovery, rising 0.03 percent to 104.91.
U.S. labor market data raises rate cut bets
Gold prices declined after data on Friday revealed that unemployment reached a 2.5-year high of 4.1 percent, signaling a softer U.S. labor market. Markets now expect a 78 percent chance of a September rate cut by the Federal Reserve, according to CME’s Fedwatch Tool. Traders are also pricing in a greater chance of a second interest rate cut in December. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
U.S. inflation data
Market focus this week shifts to Fed Chair Jerome Powell’s semi-annual Congressional testimony, comments from a series of Fed officials, and U.S. inflation data. Softer inflation data and a dovish tone from Powell, when he testifies, will likely be the ideal catalysts for gold prices to consider new highs.
Besides, China’s central bank, the top gold consumer, refrained from buying gold for its reserves for a second straight month in June. However, demand remains strong and is likely to keep supporting gold prices.
Read: Oil prices steady amid storm threat and demand concerns
Other precious metals
In line with the decline in gold prices, spot silver declined 0.45 percent to $31.07 while palladium lost 1.96 percent to $1,006.25. Copper, however, rose 0.28 percent to $4.67 while platinum declined by 0.51 percent to $1,021.52.
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