Supported by dovish central banks and global growth worries, gold is trading in a range on Friday with investors waiting for US payrolls data due to be released later today as dollar index is on a slight increase. While Fed is expected to cut the rates in July meeting in case of weaker than expected employment and wage growth data, it was stated that data which would satisfy expectations would not be enough to ease central banks’ concerns. In the meantime, data released today in Japan showed household spending increased for the sixth consecutive month in May while it was stated that household spending, which is seen as an indicator of private consumption that accounts for 2/3 of Japanese economy, showed signs of recovery. On the other hand in Germany, data showed factory orders declined more than expected in May, dashing hopes for recovery as it was stated recession risk had risen for German economy.
Gold prices hold tight by finding support from global growth worries and dovish central banks while yellow metal is calm on Friday ahead of US payrolls data due to be released later today which is expected to influence Fed’s monetary policy and possibly rate cut decision in July meeting.
As of 12:47 GMT+3, spot gold was trading at $1,414.52 an ounce while dollar index was up to 96.94. US 10-year Treasury yield was also slightly up to 1.965.
CMC Markets chief market strategist Michael McCarthy said on Reuters that, US payrolls data being weaker than expected would be a confirmation of one of the factors that supported gold prices which was low interest rate environment.
Reuters economists expect employment growth to be 160,000 while Fed is expected to cut the rate in July if data were to be lower than expected. In addition to this, it was also stated that data which would satisfy expectations would not be enough to ease central banks’ concerns regarding slowing global economy.
In the meantime, data released today in Japan showed household spending increased by 4% in May, showing the best performance in four years. By increasing for the sixth consecutive month, household spending which is seen as an indicator of private consumption that accounts for 2/3 of Japanese economy showed signs of recovery.
On the other hand in Germany, data showed today factory orders declined more than expected in May and Eurozone’s largest economy continued to weaken further. While hopes for recovery in industrial production were dashed with factory orders declining by 2.2% in May, weak orders would lead industrial production to weaken further in the second half of the year. In addition to this, it was stated that trade dispute between the US and China would contribute to 2% decline in production while recession risks for German economy had risen with Brexit uncertainty and slowing global economy damaging Germany’s economic outlook.