By Yara Abi Farraj

UAE gold prices rise, global rates down as investors await U.S. jobs data

Traders are on the lookout for the ADP employment report and jobless claims data due later in the day

Traders raised the chance of a 50-basis-point rate cut on September 18 to 45 percent from 38 percent, according to the CME FedWatch Tool

Published: Thu 5 Sep 2024, 10:04 AM

Gold prices declined on Thursday as investors awaited the release of U.S. payrolls data which could provide additional insight into the size of the expected September rate cut by the Federal Reserve.

In the UAE, gold prices rose AED1.25 with 24-carat gold inching up to AED302 and 22-carat gold rising to AED279.75. Meanwhile, 21-carat gold reached AED270.75 and 18-carat gold hit AED232.

Globally, spot gold declined 0.07 percent to $2,494.36 as of 5:06 GMT. Meanwhile, U.S. gold futures inched down 0.04 percent to $2,525.10.

U.S. job openings decline

Gold prices declined after recent data revealed that U.S. job openings dropped to a 3.5-year low in July, signaling a cooling in the labor market. However, the decline in this data set on its own is not enough to justify a 50-basis-point cut this month.

Traders raised the chance of a 50-basis-point rate cut on September 18 to 45 percent from 38 percent, according to the CME FedWatch Tool. Non-yielding assets like bullion tend to perform well when interest rates are low. In addition, gold is also considered a hedge against economic and political uncertainties.

The market now awaits the release of the U.S. nonfarm payrolls (NFP) report due on Friday, which is essential for Fed expectations. If the NFP data also reflects a weaker labor market, expectations of a 50-basis-point rate cut will rise, impacting the dollar and boosting gold prices.

Traders are also on the lookout for the ADP employment report, data on the U.S. services industry, and jobless claims data due later in the day.

San Francisco Fed President Mary Daly said that rate cuts were essential to keep the labor market healthy. Meanwhile, Atlanta Fed President Raphael Bostic said that keeping interest rates too high for much longer risked causing too much harm to employment.

Read: Abu Dhabi’s Masdar’s $1 billion green bond issuance drew $4.6 billion in demand, oversubscribed 4.6x

Other precious metals

As gold prices declined, the precious metals market saw mixed movement. Spot silver dipped 0.28 percent to $28.21 while platinum gained 0.85 percent to $910.20. Palladium, however, declined 0.43 percent to $930.

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