Gold lacks direction as traders turn cautious ahead of jobs data

Bengaluru — Gold was little changed on Thursday as investors kept to the sidelines ahead of US payrolls data that could provide more clues on the size of an expected rate cut this month.

Spot gold steadied at $2,494.73/oz by 4.40am GMT. US gold futures lost 0.1% to $2,524.90.

Non-yielding bullion tends to perform well when interest rates are low. It is also considered a hedge against economic and political uncertainties.

Data overnight showed that US job openings dropped to a three-and-a-half-year low in July, suggesting the labour market was losing steam, but the reduction on its own is probably not enough to warrant a half-percentage-point rate cut by the Federal Reserve in September.

San Francisco Fed president Mary Daly said that rate cuts were needed to keep the labour market healthy.

Traders raised the odds of a 50 basis point (bp) rate cut on September 18 to 45% from 38%, according to the CME FedWatch Tool. The US nonfarm payrolls report due on Friday is pivotal for Fed expectations.

If the NFP figures undershoot expectations, it would bring a 50bp cut back into the picture, likely denting the dollar and boosting gold, said Tim Waterer, chief market analyst, KCM Trade.

“The highs for gold in 2024 may not yet have been reached, with the $2,600 level a viable target before year-end, if the Fed delivers the goods with a succession of quick-fire rate cuts before year-end,” said Waterer.

The ADP employment report, a reading on the US services industry, and jobless claims data due later in the day are also on the investors’ radar.

“Central banks appear to be key drivers of gold demand over recent quarters,” analysts at NAB said in a note. NAB also raised its 2024 average forecast for gold to $2,315.

Spot silver eased 0.2% to $28.21/oz, platinum climbed 0.9% to $910.50 and palladium fell 0.3% at $930.76.

Reuters