By Sherin Elizabeth Varghese
(Reuters) – Gold prices were little changed on Thursday near a two-week high after softer-than-expected U.S. economic data spurred hopes of interest rate cuts as early as September and focus shifting to non-farm payrolls data.
Spot gold was unchanged at $2,357.78 per ounce, as of 0959 GMT after prices hit their highest level since June 21 on Wednesday. U.S. gold futures were down 0.1% at $2,366.20.
Bullion prices in the previous session gained more than 1% after a weak services report and ADP employment report on Wednesday depicted a slowing U.S. economy.
“It appears that there’s a strong chance that the rate cuts might occur some time in the end of third quarter or early part of the fourth quarter, which just makes gold a lot more attractive than the alternative bonds,” said Alex Ebkarian, chief operating officer at Allegiance Gold.
Lower rates reduce the opportunity cost of holding non-yielding gold.
Minutes of the Fed’s June meeting acknowledged the U.S. economy appeared to be slowing and “price pressures were diminishing”.
“Long-term wise, we’re seeing the sanctions that the U.S. placed inducing a lot of central banks and other governments to move towards gold specifically to eliminate the counterparty and default risk,” Ebkarian added.
The sanctions, announced last month, are aimed at cutting off Russia’s access to products and services needed to sustain military production for its war in Ukraine.
Traders are now focused on U.S. nonfarm payrolls data, due on Friday. The market is looking for weaker job creation last month, said Ole Hansen, head of commodity strategy at Saxo Bank.
“Together with an expected easing in wage pressure, the precious metal market is likely to react positively should these numbers be confirmed,” Hansen added.
Spot silver fell 0.3% to $30.37 while platinum rose 1.4% at $1,010.95.
Palladium dropped 0.9% to $1,020.75 after scaling its highest level since mid-April in the previous session.
(Reporting by Sherin Elizabeth Varghese and Daksh Grover in Bengaluru; editing by Jason Neely)
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