Fundamental analysis
10 May, 2021
Gold prices inched higher on Monday to trade near a three-month peak hit last week after weaker-than-expected U.S. jobs data supported hopes that interest rates will remain low for some time, bolstering the metal’s appeal. Data released on Friday showed U.S. job growth unexpectedly slowed in April, as businesses scrambled for workers and raw materials amid rapidly improving public health and massive government aid. The 266,000 jobs that U.S. firms added last month were “nowhere near” what was expected, a Federal Reserve official said. The U.S. central bank has pledged to keep interest rates near zero until inflation and employment pick up. Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies. The dollar index languished near a more than two-month low against its rivals. Reflecting increased investor interest in gold, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.6% on Friday. Speculators increased their bullish positions in COMEX gold and silver contracts in the week to May 4.
