Gold prices surged 0.6% to $2,082.76 per ounce in early Asian trading on Thursday, building on the 3.4% jump recorded in the previous session - marking the biggest daily gain since mid-August. According to Ajel English, the precious metal is now positioned for a weekly gain of 5.9% as investors await the crucial US non-farm payrolls report scheduled for Friday. The upward momentum comes as the dollar weakened on Wednesday after a sweeping election victory removed a source of market uncertainty, while investors evaluated the possibility of regulatory changes.
Two Federal Reserve officials made a case for modest and steady interest rate increases to tackle above-target inflation on Thursday, marking the first round of comments from central bankers since Democrats won control of Congress. As reported by Ajel English, traders currently see an 83% chance that the Fed will raise rates in December, according to CME's FedWatch tool - up from the previous 71% probability. Higher interest rates increase the opportunity cost of holding non-yielding bullion, reducing its appeal to investors. A weaker dollar increases the appeal of the dollar-priced precious metal for holders of other currencies.
A report from the ADP Research Institute released Wednesday showed private sector job growth in the US continued to rise in October, providing additional context for the upcoming employment data. According to Ajel English, investors are now awaiting the US non-farm payrolls report due Friday to better gauge the Federal Reserve's monetary policy outlook. The combination of positive economic indicators and policy uncertainty has created a supportive environment for precious metals.
The Bank of England raised interest rates for the first time in over three years on Thursday and warned that at least one more increase was likely if the US-Iran conflict continues. According to The Economic Times, the European Central Bank is looking at indicators to see if an interest rate hike will be warranted next month, after it held rates steady in October. Meanwhile, Poland's central bank has reached its previously stated target for gold reserves of 700 metric tons.
Among other metals, spot silver rose 0.3% to $52.37 per ounce, platinum gained 0.6% to $1,505.85, while palladium slipped 0.1% to $1,033.83. According to Ajel English, all three metals were headed for weekly gains, indicating broad-based strength in the precious metals complex. The divergent performance reflects different demand dynamics across the precious metals sector.
