By Ashitha Shivaprasad
(Reuters) – Gold rose on Thursday after recent data raised bets for a supersized Federal Reserve interest rate cut this month, but caution ahead of U.S. payrolls data capped further gains.
Spot gold advanced 0.5% to $2,506.00 per ounce by 0630 GMT. U.S. gold futures firmed 0.4% to $2,536.10.
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 U.S. job openings dropped to a 3-1/2-year low in July, but the reduction on its own is possibly not enough to warrant a half-percentage-point rate cut by the Fed.
Traders raised the odds of a 50-basis-point cut to 45% from 38%, according to the CME FedWatch Tool. Focus is on non-farm payrolls (NFP) report due on Friday.
San Francisco Fed President Mary Daly said rate cuts were needed to keep the labour market healthy.
“We are seeing a prudent approach by investors until we see the NFP data. If the figures undershoot expectations, it would bring a 50-bp cut back into the picture, boosting gold,” said Tim Waterer, chief market analyst, KCM Trade. [USD/]
The 2024 highs for gold may not yet have been reached, with the $2,600 level a viable target before year-end, if the Fed delivers a succession of quick-fire rate cuts before year-end, Waterer added.
The ADP employment report, a reading on the U.S. 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 gained 0.3% to $28.37, platinum climbed 1% to $911.58 and palladium rose 0.3% at $936.43.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu and Sumana Nandy)
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