Gold succumbs to profit-taking after US jobs data-fuelled rally

[BENGALURU] Gold prices slipped on Monday (Aug 4) as investors booked profits after a sharp rise in the previous session following weaker-than-expected US jobs data that boosted expectations for a US Federal Reserve interest rate cut in September.

Spot gold lost 0.3 per cent to US$3,351.80 per ounce as at 8.55 am. Bullion had risen more than 2 per cent on Friday. However, US gold futures gained 0.2 per cent to US$3,404.80.

The US dollar index fell 0.5 per cent against a basket of rivals, making gold more affordable for holders of other currencies. Meanwhile, the benchmark 10-year yield languished near a five-week trough.

A weaker than expected US employment growth in July and a downward revision of 258,000 jobs in the May and June non-farm payrolls signalled a sharp deterioration in labour market conditions and revived hopes of a Fed rate cut in September, with markets now pricing in a 90 per cent chance, per CME FedWatch tool.

Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.15 per cent to 953.08 tonnes on Friday from 954.51 tonnes on Thursday.

Demand for physical gold in key Asian markets improved slightly last week as a pullback in prices sparked buying interest, though volatility kept some buyers cautious.

Asian markets tracked Wall Street lower as fears for the US economy returned with a vengeance, prompting investors to price in an almost certain rate cut in September and undermining the dollar.

Spot silver fell 0.5 per cent to US$36.83 per ounce, platinum slipped 0.6 per cent to US$1,307.25 and palladium dipped 1.6 per cent to US$1,189.27. REUTERS