Gold futures experienced a notable increase on Thursday (June 8), supported by a weakening US dollar and expectations that the Federal Reserve (Fed) would keep interest rates unchanged during its upcoming meeting this month. The rise in gold came after the United States reported higher-than-expected numbers of unemployment benefit applicants, indicating a potential cooling of the US labor market.
Closing the day’s trading, gold futures climbed by $20.20, or 1.03%, settling at $1,978.60 per ounce. Similarly, silver futures surged by 81.90 cents, or 3.48%, concluding at $24.348 per ounce. However, platinum futures experienced a decline of $10.70, or 1.04%, settling at $1,013.90 per ounce. Palladium futures followed suit, falling by $29.60, or 2.1%, to settle at $1,358.30 per ounce.
The weakening of the US dollar played a significant role in the gold rally, as it made gold contracts, priced in dollars, more affordable for investors holding the currency.
In line with the positive performance of gold, the US Department of Labor reported a rise in initial applications for unemployment benefits, increasing by 28,000 to reach 261,000 last week. This figure represents the highest level recorded since October 2021 and surpasses analysts’ forecast of 235,000. The data suggests a potential slowdown in the US labor market and could influence the Fed’s decision on interest rates.
According to the latest CME Group’s FedWatch Tool, investors are currently weighing a 73% probability that the Fed will maintain interest rates within the range of 5.00-5.25% during its upcoming meeting on June 13-14. Conversely, only 29.9% of investors expect the Fed to raise rates by 0.25% to 5.25-5.50%.
Market participants are awaiting the release of the May Consumer Price Index (CPI) on June 13, just before the Fed announces the results of its monetary policy meeting on June 14. The headline and core CPI are anticipated to show signs of moderation, although they remain above the Fed’s target of 2%.
As investors keep a close eye on these developments, the gold market remains influenced by factors such as the US dollar’s performance, labor market indicators, and the Fed’s decision on interest rates.
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Friday, June 9, 2023