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Gold trades near one-month high on expectations of Fed rate cut

by xyonent
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Gold prices fell on Monday but remained near their highest level in more than a month hit in the previous trading day as weak U.S. economic data strengthened expectations that the Federal Reserve will cut interest rates in September.

Basics

* Spot gold was down 0.2% to $2,386.58 an ounce as of 0022 GMT, after rising on Friday to its highest since May 22. U.S. gold futures were down 0.2% to $2,393.80.

* Data on Friday showed the unemployment rate reached a two-and-a-half-year high of 4.1 percent, signaling a weak labor market.

* The market is pricing in a 78% chance of the US central bank cutting interest rates in September, according to CME’s Fedwatch tool. Traders are also pricing in the possibility of a second rate cut in December. * Lower interest rates lower the opportunity cost of holding non-yielding bullion. * Bullion prices were however held back by news that the central bank of China, the biggest consumer, refrained from buying gold for its reserves for a second consecutive month in June. * Physical gold dealers in India last week offered discounts as prices soared, awaiting a possible cut in import tariffs in the upcoming budget.

* Meanwhile, sales of gold products at the Perth Mint fell and silver sales fell to the lowest level since June 2019, the refinery said on Friday.

* Spot silver fell 0.2% to $31.15, platinum lost 0.3% to $1,024.00 and palladium lost 0.8% to $1,017.78.

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