Gold takes a breather from five-session rally

Bengaluru — Gold’s five-session record surge, which set the metal on track for its third consecutive weekly rise, came to a halt on Friday as market focus shifted to the US nonfarm payrolls data that could offer more clues on the Federal Reserve’s monetary policy trajectory.

Spot gold was down 0.5% at $2,278.50/oz at 3.28am GMT, after hitting a record high of $2,305.04 on Thursday. US gold futures lost 0.5% to $2,296.90.

“Gold will continue to rally with normal pullbacks,” Luca Santos, an analyst at ACY Securities said.

The dollar’s decline, investor expectations that the Fed would cut rates in 2024, economic uncertainty and rising tension in the Middle East had been a driving force for the markets and much more for gold, Santos added.

Bullion was on track for a third consecutive weekly gain, up 2.3% so far, also driven by strong central bank buying and demand from momentum-following funds.

“Gold trades in overbought territory,” InProved precious metals trader Hugo Pascal said, adding that he expected a high probability of a correction in the coming days, with $2,250 as the first target.

Focus now shifts to US March nonfarm payrolls data due at 12.30am GMT which could shed more light on the timing of the Fed’s first rate cut.

“A stronger [nonfarm payrolls] will put pressure on the metal complex, indicating rising inflationary pressures,” Pascal said.

Fed chair Jerome Powell has reiterated that the US central bank has time to deliberate over its first rate cut, given the strength of the economy and recent high inflation readings.

Traders are currently pricing in about 65% chance that the Fed will cut rates in June, according to the CME FedWatch tool. Lower interest rates reduce the opportunity cost of holding bullion.

Elsewhere, spot silver fell 1.7% to $26.49/oz, after hitting its highest since June 2021 in the previous session. Platinum eased 0.4% at $921.66. Both the metals were on track for a weekly rise.

Palladium lost 1.9% at $1,002.03.

Reuters