Gold prices moved modestly higher on Monday, remaining close to the seven-week highs reached in the previous session as investors monitored geopolitical uncertainty surrounding Iran and looked ahead to key U.S. inflation data for further signals on the Federal Reserve’s interest-rate trajectory.
Spot gold gained 0.3% to $4,354.51 an ounce as of 03:03 ET (07:03 GMT), while U.S. gold futures also advanced 0.3% to $4,414.40.
Bullion climbed to its highest level since June 17 on Friday after U.S. employment figures showed that the economy unexpectedly lost jobs in July. Employment gains from previous months were also revised significantly lower, raising fresh concerns over the strength of the labour market.
Weak U.S. jobs data shifts Fed expectations
The disappointing employment figures prompted investors to substantially reduce expectations for an interest-rate increase at the Federal Reserve’s September meeting.
Futures markets now assign less than an even probability to a rate increase at the Fed’s September 15-16 meeting, compared with odds above 50% before the latest employment report.
A less restrictive interest-rate environment is generally supportive for gold because bullion does not generate interest, meaning lower rates reduce the opportunity cost associated with holding the precious metal.
Attention is now turning towards U.S. consumer inflation figures scheduled for Wednesday, followed by producer price data on Thursday. Weaker inflation readings could reinforce expectations that the Fed will have greater scope to maintain or move towards a less restrictive monetary policy stance.
Iran uncertainty maintains safe-haven demand
Geopolitical risks are also helping to keep gold in focus. Iran has indicated that it is approaching a final agreement with Oman over the creation of new shipping lanes through the Strait of Hormuz, although Tehran maintains that Washington must satisfy several additional conditions before the strategically important waterway can fully reopen.
Persistent geopolitical tensions typically increase demand for gold as a safe-haven asset. However, renewed strength in crude oil prices is complicating the outlook by raising the possibility of additional inflationary pressures, which could limit the Federal Reserve’s ability to adopt a more accommodative policy stance.
Silver, platinum and copper advance
Other precious metals also strengthened. Silver rose 1.3% to $64.36 an ounce, while platinum increased 0.5% to $1,757.64.
Copper prices moved higher as well. Benchmark copper futures on the London Metal Exchange gained 0.6% to $14,126.33 per tonne, while U.S. copper futures advanced 0.7% to $6.635 per pound.
“Copper has rallied sharply on expectations of US import tariffs, as traders rush metal into the US and physical markets tighten. With prices back near record highs, any policy disappointment could put that tariff premium to the test,” ING analysts said in a recent note.