Mumbai, 5 Aug (Commoditiescontrol): Gold prices edged lower on Monday as investors engaged in profit-taking, though concerns over a potential U.S. recession and increasing expectations of interest rate cuts kept the downside in check.
By 0158 GMT, spot gold had dipped 0.1% to $2,439.94 per ounce, while U.S. gold futures climbed 0.5% to $2,482.00. The mixed movement comes after Friday's economic data revealed slower-than-expected job growth in July, with unemployment rising to 4.3%. This pointed to potential weaknesses in the U.S. labor market, heightening fears of a recession and bolstering the likelihood of a rate cut at the Federal Reserve's upcoming meeting on September 17-18.
Market sentiment has shifted sharply, with traders now pricing in a more than 70% chance of the Fed lowering rates by 50 basis points in September, compared to just 11.5% a week earlier, according to the CME FedWatch tool. Lower interest rates generally favor gold by reducing the opportunity cost of holding the non-yielding asset.
Broader financial markets reflected the same anxiety, as share markets in Asia slid and bonds rallied on growing fears of a U.S. recession, prompting widespread risk aversion.
In India, gold premiums fell last week as the recent recovery in prices dampened a buying spree triggered by the government's move to ease import taxes. Meanwhile, weakening consumer sentiment in China, the world's top gold consumer, further weighed on demand.
Elsewhere, geopolitical tensions added another layer of uncertainty. The U.S. military announced plans to deploy additional fighter jets and Navy warships to the Middle East, as Washington aims to strengthen defenses following threats from Iran and its allies Hamas and Hezbollah.
In other precious metals, spot silver remained steady at $28.55 per ounce, platinum dropped 0.76% to $950.60, and palladium declined 0.8% to $884.73.
(By Commoditiescontrol Bureau: 09820130172)
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