Gold holds near four month low as rate-cut hopes dwindle

Gold steadied near a four-month low on Friday, as comments from US Federal Reserve chair Jerome Powell reduced expectations of a near-term rate cut, putting bullion on track for a weekly fall.

Fundamentals

• Spot gold was unchanged at $1,270.71/oz as of 1.39am GMT, having fallen to $1,265.85/oz, its lowest since end-December, in the previous session.
• Spot gold has fallen 1.2% so far this week.
• US gold futures were steady at $1,271.70/oz.
• The dollar looked set to end the week with a firmer tone on Friday as markets scaled back bets on a US rate cut, though much depends on what jobs data due later in the session says about the health of the economy and wages.
• A stronger dollar makes gold costlier for holders of other currencies.
• Asian share markets were subdued on Friday amid thin holiday trade as investors pared expectations for a US rate cut in 2019.
• On Wednesday the US Federal Reserve held interest rates steady with chair Jerome Powell further stating there was no need for any readjustment in prices anytime soon and that inflation risks were based on transitory factors.
• US worker productivity increased at its fastest pace in more than four years in the first quarter, depressing labour costs and suggesting inflation could remain benign for a while.
• A slowing global economy, stock market turmoil, delays to interest rate rises and potential US dollar weakness in future are expected to boost average annual gold prices to their highest since 2013, a Reuters poll found.
• SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.16% to 745.52 tons on Thursday from 746.69 tons on Wednesday.
• The total unmatured swap purchase amount will be 100 tons in the Turkish central bank’s new lira-for-gold swap market, according to a letter it sent to lenders, bankers told Reuters on Thursday.
• Harmony Gold Mining’s nine-month total gold production increased 29% to 33,673kg.

Data ahead (GMT)

8.30am — UK reserve assets total April

9am — EU HICP Flash YY April

9am— EU HICP-X & F&E Flash YY April

12.30pm — US non-farm payrolls April

12.30pm — US unemployment rate April

12.30pm — US average earnings YY April

2pm — US ISM non-manufacturing PMI April