Gold futures closed higher on Wednesday, supported by a decline in US bond yields. Investors remained watchful as the US Congress prepared to vote on a bill to raise the debt ceiling.
Gold futures increased by $5, or 0.25%, closing at $1,982.10 per ounce. Silver futures rose by 34.80 cents, or 1.50%, to close at $23.587 per ounce. Meanwhile, platinum futures fell by $22.90, or 2.24%, closing at $999 per ounce. Palladium futures experienced a decline of $38.50, or 2.8%, ending at $1,359 per ounce.
The decrease in the 10-year government bond yield to 3.669% provided support to the market. Lower US Treasury yields reduce the opportunity cost of holding gold, which does not offer interest.
However, gold futures experienced an overall decline of 1.8% throughout May, largely due to concerns of potential interest rate hikes by the Federal Reserve. The release of strong labor data in the US further bolstered expectations of a Fed rate hike.
The US Bureau of Labor Statistics published the results of the Job Openings and Labor Turnover Survey (JOLTS), revealing an increase of 358,000 jobs to 10.1 million in April. This contradicted analysts’ expectations, as they anticipated a decrease to 9.375 million jobs following three consecutive months of declines.
Investors are considering the likelihood of a Fed interest rate hike in June, given the unexpected rise in job openings. According to data from CME Group’s FedWatch Tool, investors estimate a 66.4% chance of a 0.25% interest rate increase to a level of 5.25-5.50% at the June 13-14 meeting. The probability of the Fed maintaining interest rates at 5.00-5.25% stands at 33.6%.
In addition to these factors, investors are closely monitoring the US Congress, which will vote on the “Fiscal Responsibility Act” to increase the debt ceiling. The vote is scheduled for today (June 1) at 7:30 a.m. Thai time. Market participants are also anticipating the release of non-farm payroll data for May, which will provide further insights into the US employment situation.
The Spot Market is Open
Thursday, June 1, 2023