Gold’s impressive five-session record rally, positioning the metal for its third consecutive weekly rise, came to a temporary halt on Friday as market attention turned towards the eagerly awaited U.S. non-farm payrolls data, poised to offer insights into the Federal Reserve’s monetary policy direction.
As of 0328 GMT, spot gold experienced a slight dip of 0.5%, settling at $2,278.50 per ounce, following its remarkable surge to a record high of $2,305.04 on Thursday. Meanwhile, U.S. gold futures retreated by 0.5% to $2,296.90.
Analyst Luca Santos from ACY Securities remarked that while gold may experience periodic pullbacks, its rally is anticipated to persist. Factors such as the weakening U.S. dollar, expectations of Fed rate cuts, economic uncertainties, and escalating tensions in the Middle East have significantly bolstered gold’s appeal to investors.
Bullion remained on track for its third consecutive weekly gain, marking a 2.3% increase thus far. This upward trajectory has been fueled by robust central bank purchases and demand from momentum-following funds.
However, Hugo Pascal, a precious metals trader at InProved, cautioned that gold is currently trading in overbought territory, suggesting a high likelihood of a corrective phase in the near future. Pascal identified $2,250 as the initial target for any potential correction.
All eyes are now on the U.S. March non-farm payrolls (NFP) data scheduled for release at 1230 GMT, expected to provide further clarity on the timing of the Fed’s inaugural rate cut. Pascal noted that a stronger-than-anticipated NFP report could exert pressure on the metal complex, signaling mounting inflationary pressures.
Federal Reserve Chair Jerome Powell has reiterated the central bank’s deliberate approach towards its first rate cut, emphasizing the robustness of the economy and recent inflationary readings.
Market sentiment suggests a 65% probability of a rate cut by the Fed in June, according to the CME FedWatch tool. Lower interest rates typically diminish the opportunity cost of holding gold, further bolstering its attractiveness to investors.
In parallel, spot silver experienced a 1.7% decline, settling at $26.49 per ounce after reaching its highest level since June 2021 in the previous session. Platinum also witnessed a marginal 0.4% dip, resting at $921.66. Despite these retracements, both metals remained on course for a weekly rise.
Meanwhile, palladium registered a notable 1.9% decline, reaching $1,002.03, reflecting the broader trend of retracement observed across precious metals markets amidst the anticipation surrounding the forthcoming U.S. jobs data.