Gold holds steady as investors brace for US jobs data

Gold prices showed little movement on Thursday as traders braced themselves for the imminent release of crucial US jobs data, eagerly awaiting its potential impact on the Federal Reserve’s policy decisions. At the time of writing, spot gold steadied at $1,917.69 per ounce, while U.S. gold futures slipped 0.2% to $1,923.60.

The slight easing of the dollar index has made gold more affordable for overseas buyers, albeit with benchmark yields hitting a four-month high, which has limited gold’s upside potential.

However, analysts suggest that gold may face downward pressure in the short term. Craig Erlam, senior markets analyst at OANDA, highlighted the absence of a convincing combination of economic data that would sway policymakers at the Federal Board to maintain their current approach.

All eyes are now on key indicators slated for release on Thursday. Forecasts anticipate a rise in initial unemployment benefit claims for the week ending July 1, while early data from the ADP National Employment report suggests an increase in employment during June. Additionally, the Job Openings and Labor Turnover Survey (JOLTS) results are eagerly anticipated.

Erlam further highlighted that a robust jobs report would solidify expectations of an interest rate hike this month, making a September hike more likely as well. Should this scenario unfold, the $1,900 price level could face significant pressure.

During the Federal Open Market Committee (FOMC) June meeting, minutes revealed that nearly all Fed participants deemed it appropriate to maintain the existing federal funds rate at 5%-5.25%.

According to CME’s Fedwatch tool, there is an 89% chance of a 25-basis-point rate increase this month. Many market participants are expecting rate reductions in July.