World gold prices remained around a seven-week high in the first session of the week, thanks to a weak USD and falling US bond yields. Investors are waiting for important employment data that could impact the Fed's policy direction.
Spot gold prices in this afternoon's trading session increased by 1% to 4,344.4 USD/ounce, after reaching the highest level since October 21 last weekend. US gold futures also rose 1.1% to $4,377.4 an ounce.
The USD Index fluctuates around a two-month low, making gold more attractive to foreign investors, while the yield on the 10-year US government bond has decreased slightly.
Mr. Kelvin Wong, senior analyst at OANDA, commented: Gold is likely to maintain its upward momentum ahead of the US non-farm payrolls report. Signs that the cooling labor market could continue to curb short-term yields and weaken the US dollar, paving the way for gold prices to head towards the 4,380 - 4,440 USD/ounce range, after a solid increase from the support level of 4,243 USD".
The market continues to monitor the Fed's policy outlook, after the agency cut interest rates by 0.25 percentage points last week in a rare dividend decision. However, the Fed has signaled a temporary halt to the easing cycle, due to high inflation and unclear job prospects.
Two Fed officials opposed the cut decision, arguing that inflation was still too high to justify a lower interest rate policy. Investors now see the Fed likely to cut rates again in 2026 (which needs to be reviewed annually), with this week's jobs report being a key test for that expectation.
In a low interest rate environment, non-yielding assets such as gold often tend to increase in price due to reduced holding opportunity costs.
The ANZ report said that the move to allow pension funds in India to invest in gold and silver ETFs could help increase institutional capital flows into precious metals.
This new regulation could strengthen investor confidence and sentiment, thereby boosting the holding ratio of gold in the portfolio, ANZ said.
Spot silver prices rose 2% to $63.23 an ounce, after setting a record of $64.65 an ounce on Friday and then quickly adjusted.
Despite a gain of more than 115% since the beginning of the year, ANZ warned of the risk of a price drop due to the possibility of the US exempting silver import tax, which could ease the shortage of supply, while the valuation of silver is much higher than gold, easily leading to a shift in capital flows between the two metals.
In other metals, platinum fell 0.4% to $1,738.23 an ounce, while palladium rose 2.9% to $1,531.28 an ounce.
