As the dollar retreated before key nonfarm payrolls data, gold prices rose in Asian trade on Friday, extending recent gains. The yellow metal was sitting on some gains this week after weak U.S. economic data pushed up bets that the Federal Reserve will begin cutting interest rates by September.
Gold rose 0.3% to $2,363.61 an ounce, while gold futures expiring in August rose 0.3% to $2,371.56 an ounce by 01:05 ET (05:05 GMT).
Gold Buoyed by Rate Cut Bets, Payrolls Data Awaited
Spot gold prices were set to add 1.6% this week, trading about $100 away from a record high, benefiting from increased bets on a September rate cut. The CME FedWatch tool showed traders pricing in over a 66% chance the Federal Reserve will cut rates by 25 basis points in September.
However, optimism over rate cuts was tempered by hawkish signals from the Fed, with minutes of the June meeting showing policymakers remaining skeptical towards cutting rates. The nonfarm payrolls data is also set to provide more definitive cues on the labor market, a key point of contention for the Fed in reducing interest rates.
Lower rates bode well for gold and other precious metals, as they increase their appeal compared to investing in debt or the dollar. Other precious metals also rose tracking this notion, with silver up 0.2% on Friday and palladium vastly outperforming their peers this week.
Copper Set for Weekly Gains After Steep Losses in June
Copper prices rose on Friday and were set for a positive end to the first week of July, after facing steep losses in June. Benchmark copper on the London Metal Exchange rose 0.3% to $9,913.50 a tonne, while one-month copper rose 0.3% to $4.5777 a pound.
Both copper contracts were up between 3% and 4% this week, recovering from steep losses in June. However, sentiment towards copper remained on edge amid doubts over an economic recovery in top importer China, as European trade tariffs on China's electric vehicle exports took effect from Friday.
Analysis:
Gold prices rose as the dollar retreated ahead of key nonfarm payrolls data, with increased bets on a September rate cut boosting the appeal of precious metals. Lower interest rates benefit gold and other metals, while copper also saw gains after recovering from steep losses in June.
Investors should keep an eye on upcoming economic data and central bank signals to gauge the future direction of these markets and consider adjusting their investment strategies accordingly.