Ahead of the release of US non-farm payrolls data later today, GOLD prices are trading slightly higher, all set for a weekly gain for the seventh straight week. At the time of writing, gold is trading around $1,418.
Investors remain cautious ahead of today’s NFP data over worries that it could influence Fed’s decision to cut rates in July. If the figures come in weaker than expected, it would raise the likelihood of an impending rate cut by US’s central bank in its upcoming meeting this month, and further increase the demand for safe haven assets like gold.
Economists are expecting jobs to have risen by 160k in June, better than the 75k rise in May. The Fed’s next policy meeting is scheduled for 30-31 July and investors are expecting a 25 bp rate cut to be announced then.
Lower interest rates by central banks, especially the Fed, make gold more attractive as an asset to invest in. In addition, lower rates weaken the currency, in this case the US dollar, which would make gold more affordable for buyers, further driving interest in this instrument.