(Bloomberg) — Gold erased earlier losses after US job openings data added to signs of a cooling labor market, setting the stage for the Federal Reserve to start lowering borrowing costs soon.
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US job openings fell in July to the lowest since the start of 2021 and layoffs rose, according to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, known as JOLTS.
Treasury yields and the dollar tumbled after the print, helping bullion erase early losses to gain as much as 0.3%. Swap traders are now projecting the US central bank will cut its rate by a full percentage point in 2024.
There may be some price correction in gold in the near term as the overall positioning is higher than at the same period in any prior rate-cutting cycle, according to Suki Cooper, an analyst at Standard Chartered. Yet she expects bullion to rise toward $2,700 an ounce in 2025 on the central bank’s rate cuts.
Money managers’ bullish wagers in the week ending Aug. 27 on gold stood at the highest since March 2020, latest CFTC data showed.
Bullion fell earlier as some investors sold gold to raise cash to pay margin calls in the equities markets amid a selloff triggered by Nvidia Corp., according to Naeem Aslam, chief investment officer at Zaye Capital Markets.
Traders will now eye jobs data due Friday, which is expected to show payrolls in the world’s largest economy increased by about 165,000 last month, based on the median estimate in a Bloomberg survey of economists. Any signs of labor-sector weakening are likely to support a more aggressive pivot to easing by the Fed, potentially aiding gold.
Gold has rallied by more than a fifth this year, supported by growing optimism that the Fed will start cutting rates from this month. Lower borrowing costs typically benefit the metal, which doesn’t pay interest. Robust over-the-counter purchases and haven demand have also underpinned the advance.
Spot gold was little changed at $2,493.44 an ounce as of 2:11 p.m. in New York, after peaking at a record $2,531.75 in August. The Bloomberg Dollar Spot Index dipped 0.3%. Silver rose while palladium fell. Platinum was little changed.
–With assistance from William Clowes and Sybilla Gross.
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