In a turn of events on Wednesday, August 30, gold futures displayed a positive trajectory, finding support from a weakened dollar and a notable decline in US bond yields. The attention of investors now pivots toward the forthcoming US non-agricultural employment data slated for release on Friday. This data is eagerly anticipated as it holds the potential to offer insights into the Federal Reserve’s (Fed) course of action concerning interest rates.
The value of gold futures experienced a notable uptick of $7.90, marking a 0.40% increase and culminating at an impressive $1,973.00 per ounce. This achievement represents the highest closure since the notable date of August 4, 2023.
Conversely, silver futures faced a marginal decline of 3.50 cents, equivalent to 0.14%, placing its value at $25.104 per ounce. Furthermore, platinum futures exhibited a similar trajectory, undergoing a $2.80 dip (0.28%), ultimately settling at $983.30 per ounce. The palladium market experienced a more significant setback, encountering a decrease of $28.20 (2.2%) and reaching a value of $1,229 per ounce.
This positive turn for gold can be attributed in part to the downward trend of the dollar index against a basket of six major currencies. The index exhibited a decrease of 0.36%, culminating at 103.1621. Additionally, the yield on the 10-year Treasury note experienced a significant overnight decline, dropping by 4.106%.
The allure of gold contracts, which are denominated in dollars, was further enhanced by the depreciation of the dollar. This trend makes them more appealing to investors utilizing alternative currencies. Simultaneously, the fall in US Treasury yields positively impacted the appeal of holding gold, as it reduces the overall cost of maintaining this precious metal. It’s important to note that gold, as an asset, does not generate interest.
The surge in gold futures was also buoyed by lackluster economic indicators emerging from the United States. This development contributes to the growing sentiment that the Federal Reserve might opt to abstain from raising interest rates during its impending September meeting.
Automatic Data Processing Inc. (ADP) unveiled statistics indicating a modest increase of 177,000 jobs within the US private sector for August. This figure fell short of both analyst projections, which anticipated the addition of 200,000 jobs, and July’s more robust augmentation of 371,000 jobs.
Furthermore, the US Department of Commerce released its second estimate for the second quarter of 2023, reporting a 2.1% expansion of the gross domestic product (GDP). This result, although a growth, fell below both the initial projections of 2.4% and the previous quarter’s 2.0% upswing.
Market watchers eagerly await the unveiling of the US Personal Consumption Expenditures (PCE) Price Index, as well as the August figures for non-agricultural employment in the United States. These releases will be pivotal in discerning the trajectory of the Federal Reserve’s future interest rate decisions.
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Thursday, August 31, 2023