GOLD PRICES SURGE AS FED RATE CUT SPECULATION INTENSIFIES

• Gold rebounds strongly, rising nearly 1% in response to increasing optimism that Fed might reduce interest rates sooner.
• Friday’s US Nonfarm Payrolls report, indicating a slowdown in job creation, fuels expectations for September rate cut.
• Comments from Fed officials, including Thomas Barkin and John Williams, highlight ongoing concerns over inflation and employment trends.

Gold price rallied close to 1% on Monday, late in the North American session, bolstered by an improvement in risk appetite due to increased bets that the US Federal Reserve (Fed) might begin to ease policy sooner than foreseen. This follows last Friday’s Nonfarm Payrolls (NFP) report, which showed the economy continues to create jobs but at a slower pace.

The XAU/USD trades at around $2,320 after bouncing off daily lows of $2,291. The latest employment report in the United States (US) increased the odds for a Fed rate cut of a quarter of a percentage point in September 2024.

Market participants continue to digest the latest data from the US as April’s NFP report was softer than expected.  If the next inflation report comes in weaker than expected, traders' speculation that the US central bank might lower interest rates during the year will be confirmed.

Recently, Fed officials have crossed the newswires. Richmond Fed President Thomas Barkin said that he has not seen evidence that inflation is on track and added that current policy is restrictive enough. Earlier, New York Fed President John Williams added that the jobs market is moderating and that the Fed is looking at the “totality” of data. He added that there would be rate cuts eventually.