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Gold Prices Drift as Jobs Report Damps Speculative Buying

Investing.com - Gold prices headed lower on Monday, as doubts about the Federal Reserve's willingness to cut interest rates stopped the safe haven metal from taking advantage of further signs of global economic weakness.

Gold futures for August delivery on the Comex division of the New York Mercantile Exchange, dipped $1.05, or 0.1%, to $1,399.05 a troy ounce by 10:42 AM ET (14:42 GMT).

Prices remain well supported by fundamentals: the central bank of Poland said on Friday it had switched some $5 billion of its foreign reserves out of currency and into gold in June, adding to the list of active central bank buyers. However, short-term speculative buying appears to have eased off in the wake of the U.S. employment report.

In a session bereft of major economic reports in the U.S., Japan’s core machinery orders fell by the most in eight months - another a worrying sign that global trade tensions are hitting corporate investment.

Although German industrial production ticked up in May, the meager growth was still weaker than expected and failed to erase concerns over the slowdown in the euro zone’s largest economy.

“The upside: the German economy is not falling off a cliff. The downside: the relief is too feeble to justify any optimism,” Carsten Brzeski, chief economist at ING in Germany, said in a note.

Following the strong U.S. employment report that reduced expectations for aggressive easing from the Fed, markets turned their attention to a busy week in references for the next policy decision at the end of the month.

With no fewer than 10 policymakers on this week’s agenda, the focus will likely be on Fed Chairman Jerome Powell’s testimony to Congress on both Wednesday and Thursday.

Fed funds futures are fully pricing in a quarter-point reduction to interest rates at the July 30-31 meeting, Powell will have the opportunity to send a clearer to message to markets on the Fed’s intentions.

In other metals trading, silver futures rose 0.5% to $15.0683 a troy ounce by 10:47 AM ET (14:47 GMT).

Palladium futures fell 0.6% to $1,555.35 an ounce, while sister metal platinum gained 1.4% to $822.80.

In base metals, copper traded up 0.2% to $2.667 a pound.

-- Reuters contributed to this report.

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