Gold prices advanced on Friday to recover from a weekly loss, as traders weigh their outlook on US monetary policy following the release of private sector jobs data.
Spot gold rose almost 0.5% to $3,995 an ounce by midday, having briefly touched the $4,000 level earlier. US gold futures saw similar gains, trading at just above $4,005 an ounce in New York.
The move follows Thursday’s private US data showing the biggest October job cuts in more than 20 years, which sparked concerns about a softer labor market and boosted expectations of another Federal Reserve interest rate cut — a scenario that would benefit gold.
“The private jobs data is still indicating that a rate cut in December is likely, and that’s why gold prices are getting some kind of support,” said Soni Kumari, a commodity strategist with ANZ, in a Reuters note.
Market participants now see a 67% chance of a Fed rate cut in December, up from close to 60% in the previous session, according to Reuters.
More data needed
Still, US officials have expressed conflicting views over the outlook for monetary policy. Chicago Fed President Austan Goolsbee recently stated that the lack of official inflation data due to the ongoing US government shutdown left him “even more uneasy” about continuing to cut the cost of borrowing.
Meanwhile, the US dollar retreated, leading declines among major currencies, as investors lacking official data on the US labour market seized upon signs of weakness in the private sector.
The focus is now on macro numbers and when the US shutdown is going to get over, which is also helping safe-haven demand for gold, ANZ’s Kumari added.
Gold has risen by more than 50% year to date, on track for its best yearly performance since 1979, as expectations of US rate cuts and elevated central bank purchases have helped to lift demand and prices.
(With files from Reuters)
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