Today, European and American interest expectations raised gold and oil prices, while the dollar and euro stabilized, with markets favoring a European cut today and an American cut next September.
Gold prices rose today, Thursday, with the decline in the dollar and US Treasury bond yields in light of increasing bets that lowering US interest rates may begin next September, while investors await US non-farm payrolls data.
gold
The price of gold rose 0.3% to $2,362 per ounce in spot transactions, at the time of writing the report, after rising 1% in the last session.
US gold futures for July delivery also increased 0.25% to $2,369.5.
The dollar index settled at 104.30 points, up 0.03%, recording its lowest level in about two months, and standard 10-year US Treasury bond yields remained near their lowest levels in more than two months.
Reuters quoted Tim Waterer, chief market analyst at KCM Trade, as saying: “The fundamental outlook still looks constructive for gold as we approach possible cuts in interest rates in the second half of the year. However, the $2,300 level may be headed lower.” If we get a strong reading of non-agricultural jobs in particular.”
Employment by US private sector employers fell to its lowest level in 4 months in May, adding to the evidence of weakness in the labor market. Markets are now awaiting non-farm payrolls data tomorrow, Friday, for more indicators.
Lower interest rates reduce the opportunity cost of holding non-yielding metal.
As for other precious metals, silver rose in spot transactions by 1.8% to $30.54 per ounce. Platinum rose 1.2% to $1,003.95, and palladium increased 1.2% to $942.75.
euro
The euro rose slightly, ahead of a policy decision from the European Central Bank, as traders believe that lowering interest rates is almost certain, while the dollar fell due to renewed bets on the Federal Reserve reducing interest rates this year.
The Canadian dollar stabilized after declining last session following the interest rate cut by the Central Bank of Canada, and reached 1.3694 to the dollar, at the time of writing the report.
The euro rose 0.046% to $1.0872 as traders looked to the European Central Bank meeting later in the day for indications on the path of interest rates.
While policymakers expressed their intention to reduce borrowing costs this month, they remained cautious about how quickly subsequent cuts would occur.
In the broader market, the dollar was declining, partly due to the weakness of the labor market in the United States, which increased the justification for lowering interest rates this year.
Yesterday, Wednesday, data showed that the US services sector returned again to growth in May after a short-term contraction in the previous month, but survey details indicated a continued contraction in employment.
Oil
As for oil, it extended its gains from the last session amid growing expectations that the Federal Reserve will cut interest rates in September, but the gains were limited by the rise in US inventories and the OPEC Plus plan to increase supplies.
Brent crude futures rose 46 cents, or 0.62%, to $78.87 per barrel, and US West Texas Intermediate crude futures increased 52 cents, or 0.74%, to $74.63.
Nearly two-thirds of economists now expect interest rates to be cut in September, according to a Reuters poll from May 31 to June 5, to offset the negative impact of supply news.
Lower interest rates reduce the cost of borrowing, which may stimulate economic activity and boost demand for oil.
The two benchmarks are still heading towards a weekly decline of about 4% until Thursday, affected by the latest decision on supplies from OPEC Plus.
The group agreed last Sunday to extend most of its oil production cuts until 2025, but left room to gradually cancel the voluntary cuts by 8 members, starting in October.
