Gold prices fell on Monday as global financial markets opened for a new trading week. The precious metal briefly climbed to nearly $4,200 per ounce during early trading. However, it later lost momentum and slipped to around $4,165. Investors remained cautious as they watched US interest rate expectations and the strength of the US dollar.
The recent decline followed the release of the latest US employment report. The report showed slower job growth than economists had expected. That result reduced expectations of another interest rate increase by the US Federal Reserve. As a result, the US dollar weakened during the previous sessions. The weaker dollar also helped support gold prices.
According to Tim Waterer, Chief Market Analyst at KCM Trade, gold prices are becoming more stable. Investors now expect fewer interest rate increases in the coming months. Lower interest rates usually make gold more attractive because the metal does not pay interest.
Despite last week’s gains, the US dollar remains strong. A stronger dollar increases the cost of gold for buyers using other currencies. Therefore, it can limit further gains in the precious metal.
On Monday, the US dollar index rose by 0.1%. That small increase pushed gold slightly lower. Even so, gold gained more than 2% last week. The increase ended a four-week losing streak. It also reflected growing optimism that the Federal Reserve could delay further monetary tightening if economic conditions continue to weaken.
Economic data released on Thursday also pointed to a cooling US labor market. Employment growth slowed sharply during the previous month. Officials also revised the figures for the prior two months downward. These developments encouraged investors to expect a more cautious approach from the Federal Reserve.
Market surveys now show a 55% chance of an interest rate increase in September. Before the latest jobs report, the probability was above 60%. Lower interest rates generally support gold because they reduce the opportunity cost of holding the precious metal instead of interest-bearing investments.
Investors are now waiting for the minutes of the Federal Reserve’s June 16–17 policy meeting. The central bank is expected to release the document on Wednesday. Traders hope it will provide clearer guidance on future monetary policy and interest rate decisions.
Meanwhile, JPMorgan expects demand for gold from major sectors to remain moderate. The bank forecasts gold prices to reach around $4,300 per ounce in the third quarter. It also expects prices to climb to approximately $4,500 in the fourth quarter. However, the bank believes further gains may remain gradual because of continued economic uncertainty.
