Gold prices edged down on Monday despite weak U.S. employment figures boosting expectations of an interest rate cut from the Federal Reserve. Markets now await the release of the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) and their potential impact on economic sentiment and interest rates.
In the UAE, gold prices saw a decline, with 24-carat gold declining to AED285.25 per gram, while 22-carat gold declined to AED264. Twenty-one-carat gold recorded AED255.75, while 18-carat gold reached AED219.25.
Globally, spot gold saw a 0.28 percent decrease to $2,353.91 per ounce, as of 5:22 GMT, after reaching a more than two-week high last week. Meanwhile, U.S. gold futures saw a 0.64 percent decline to $2,359.75.
U.S. economic data
Last week’s release of U.S. employment data supported gold prices, which rose over 2 percent by the end of the week. With the number of Americans filing new claims for unemployment benefits exceeding expectations, concerns about a cooling labor market emerged. This development has bolstered expectations of an interest rate cut by the Federal Reserve, potentially in September.
However, the upcoming U.S. CPI and PPI data release this week has raised concerns and speculations about the next rate cut. If the CPI data indicates a decline in inflation, in light of softening labor market conditions, it could reinforce expectations of a rate cut soon. Hence, lower interest rates reduce the opportunity cost of holding gold.
Global developments
Geopolitical and economic events globally continue to shape the trajectory of gold prices. Recent escalations in conflict in the Middle East and improving economic conditions in China significantly impact the demand for gold. In China, consumer prices experienced a third consecutive monthly rise as producer prices declined in April, signaling improving domestic demand.
Read: Oil prices inch lower on concerns about Chinese imports, U.S. inflation
Other precious metals
In line with the trend in gold prices, other precious metals witnessed declines on Monday. Spot silver declined 0.43 percent to $28.03 per ounce, platinum fell 0.08 percent to $993.40 while palladium declined 0.03 percent to $977.43.
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