Gold futures exceeded the $2,000 mark on Thursday, marking a two-week high and closing near that level as the precious metal appeared poised for its strongest weekly performance since March.
This surge was driven by a weakening US dollar, which was influenced by disappointing employment and manufacturing data, hinting at a potential pause in interest rate hikes in the coming weeks.
Settling at $1,995.50 per ounce, the front-month gold contract on New York’s Comex gained $13.40, or 0.7%, during the day. The benchmark gold futures reached a two-week peak of $2,000.65 earlier in the session. This week, gold is on track for a 2.6% return, the highest since the week ending March 10.
The spot price of gold, which reflects physical trades in bullion and is closely monitored by certain traders, stood at $1,976.39 at 14:53 ET (18:53 GMT), showing an increase of $13.72 or 0.7% for the day. Spot gold reached a session high of $1,983.17 earlier in the day.
The Dollar Index, which measures the US currency against six major counterparts, experienced its most significant one-day decline since March 10, dropping 0.7% to a session low of 103.435.
This downward movement followed a report from Challenger, Gray & Christmas, Inc., an employment tracker, which revealed a surge in layoffs within the US technology, retail, and automotive sectors last month. Additionally, overall hirings were reported to be at their lowest level since 2016.
The employment data provided an alternative perspective challenging the belief that the labor market remained excessively strong, thereby fueling persistent inflation. This development might influence the Federal Reserve to shift its focus away from raising rates for the 11th time in 16 months when the central bank’s policymakers convene on June 14.
The dollar’s decline was further fueled by statements from Patrick Timothy Harker, a Federal Reserve policymaker and president of the Philadelphia region, who suggested that the central bank should refrain from raising rates in June.
Attention in the gold market now turns to Friday’s release of the non-farm payrolls report for May. The Federal Reserve has identified robust job and wage growth since the peak of the COVID-19 pandemic three years ago as key factors contributing to the highest US inflation in four decades.
Economists predict an increase of 180,000 jobs in the non-farm payrolls report for May, compared to April’s figure of 253,000. Any number below 200,000, as reported by the Labor Department, would be considered negative for the dollar and positive for gold.
“Gold prices are benefiting from weak US data, which is reducing the odds of a Fed rate hike,” commented Ed Moya, an analyst at online trading platform OANDA. “If the US jobs report fails to impress, that could be the catalyst to push gold above the $2,000 level.”
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