Gold prices edged lower on Wednesday as the US dollar firmed, with market participants turning their attention to the upcoming US non-farm payrolls report for insights into the Federal Reserve’s potential rate-cut decisions.
As of 0122 GMT, spot gold fell 0.1% to $2,326.08 per ounce, following a 1% decline on Tuesday. Similarly, US gold futures dropped 0.1% to $2,345.80 per ounce.
The US dollar index rose 0.1%, making gold less appealing to holders of other currencies.
A Reuters poll of FX strategists suggests that the US dollar, despite its recent strength, is expected to experience minor weakness over the next 12 months. The consensus among the strategists is that the US dollar is currently overvalued.
In April, US job openings declined more than anticipated, indicating a softening labor market which could aid the Federal Reserve in its efforts to combat inflation.
Market focus is now on the non-farm payrolls data, set for release on Friday. Investors will analyze this report to assess the health of the US economy and its implications for the Fed’s rate cut prospects in September. According to the CME FedWatch tool, traders are currently pricing in a 65% probability of a rate cut in September.
Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold.
Global central banks increased their net gold purchases to 33 metric tonnes in April, a significant rise from the revised net buying of three tonnes in March, according to the World Gold Council. This increase underscores the sustained strong demand for gold despite its high prices.
Swiss gold exports saw a decline in April compared to March. Increased shipments to India and Turkey were offset by decreased deliveries to China and Hong Kong, as per customs data.
In other precious metals, spot silver dipped 0.1% to $29.46 per ounce, platinum edged up 0.1% to $987.75 per ounce, and palladium fell 0.4% to $911.65 per ounce.
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