Gold prices rise tracking dollar weakness as weak payrolls put rate cuts in focus

Gold prices rose in Asian trade on Monday, capitalizing on a recent drop in the dollar as softer-than-expected U.S. payrolls data saw traders increase bets on eventual interest rate cuts by the Federal Reserve.

But gains in gold were held back by improved risk appetite in the wake of Friday’s nonfarm payrolls data, as investors pivoted into more risk-exposed assets such as stocks.

Spot gold rose 0.4% to $2,310.05 an ounce, while gold futures expiring in June rose 0.4% to $2,318.70 an ounce by 00:31 ET (04:31 GMT).
Gold retakes some ground as rate cut bets reemerge

Gains in gold also came after the yellow metal fell sharply from record highs over the past three weeks. Fears of high-for-longer rates and waning safe haven demand were the biggest weights on gold in recent sessions.

But the yellow metal took some relief from a drop in the dollar, which lost 0.8% last week. The dollar’s losses were driven chiefly by Friday’s payrolls reading, which sparked increased bets that the Fed will begin cutting rates by September.

While a cooling labor market gives the Fed some impetus to trim rates, its main point of contention remains the issue of sticky inflation. Inflation was seen moving further above the Fed’s annual 2% target in the first quarter, which in turn saw traders price out most expectations for rate cuts this year.

High rates bode poorly for gold, given that they increase the opportunity cost of investing in the yellow metal.

Focus this week is on a string of addresses from top Fed officials, for more cues on interest rates.

Other precious metals were somewhat mixed on Monday. Platinum futures fell 0.3% to $962.60 an ounce, while silver futures surged 1.7% to $27.130 an ounce.
Copper prices rise on weaker dollar, in sight of 2-year highs

Among industrial metals, copper prices rose on Monday, moving back towards two-year highs as metal prices benefited from a weaker dollar.

Three-month copper futures on the London Metal Exchange rose 1.7% to $9,930.0 a ton, while one-month copper futures rose 0.5% to $4.5888 a pound.

Both contracts remained in sight of two-year peaks amid expectations of tighter markets on metal sanctions against Russia, as well as hopes of improving demand in top importer China.