Gold edges down as dollar strengthens
Gold prices fell in European trade for another session on track for two-month lows, as dollar continues to dominate.
The latest US payrolls report bolstered the case for high US interest rates for an extended duration, and hurt chances of a US rate cut later this year.
Haven demand on the precious metal declined as well after Congress passed the bill raising the US debt ceiling, squashing concerns of a financial default. .
Gold Prices Today
Gold prices fell 0.5% to $1,938 an ounce, with a session-high at $1,950, after losing 1.5% on Friday, the first loss in four days, and the largest since May 5, resuming losses after a short recovery from two-month lows at $1,932.
Gold lost 0.5% last week, the fourth weekly loss in a row, and the longest such streak of losses since June 2022 as dollar strengthens.
The Dollar
The dollar index rose 0.3% on track for a second session, almost hitting 11-week highs at 104.69, against a basket of major rivals.
A stronger dollar makes dollar-denominated gold futures costlier to holders of other currencies.
US Jobs Data
The US economy added just 339 thousand new jobs in May, beating estimates of 193 thousand handily.
However, US unemployment rose to a 7-month high at 3.7% from a 53-year nadir at 3.4% plumbed in April, while averages wage rose 0.3% last month, slowing down from 0.4%.
US Rates
As wages slow down and unemployment increases, it's now likely the Federal Reserve will hold off raising interest rates in June.
Current pricing for a 0.25%% Fed interest rate hike in June currently stands at 27%.
Pricing for such hike at the July meeting however now stands at a strong 65%.
US Debt Ceiling
Both chambers of Congress passed the bill raising the US debt ceiling until January 2025, while putting limitations on government spending until the 2024 presidential elections.
US President Joe Biden plans to sign the bill into law later today to avoid a default on financial payments.
The SPDR
Gold holdings at the SPDR Gold Trust stayed flat on Friday at 938.11 tones, the lowest since May 17.
Euro declines to near two-month trough ahead of Lagarde's speech
Euro declined in European trade for a second session against dollar, almost hitting two-month lows ahead of European Central Bank President Christine Lagarde's speech later today ahead of the European Parliament.
Dollar extended its gains to 11-week highs on alternative investment demand amid bets the Federal Reserve will maintain high US interest rates for an extended period of time.
EUR/USD fell 0.3% to 1.0683, with a session-high at 1.0711, after losing 0.5% on Friday, resuming losses after a recovery from two-month lows at 1.0635.
Euro lost 0.2% last week against dollar, the fourth weekly loss in a row, and the longest such streak of weekly losses this year amid concerns about a gap in interest rates between Europe and the US.
Lagarde
ECB President Christine Lagarde is due to testify before the Committee on Economic and Monetary Affairs of the European Parliament, in Brussels.
Lagarde said on Thursday that inflation in the euro zone remains too high and will likely remain so for a long period of time.
Lagarde added there's still no proof that core inflation has peaked yet, with still some space available for policy tightening and interest rate hies in Europe.
European Rates
Recent inflation data showed European consumer prices fell to 15-month lows in May, reducing inflationary pressures on ECB policymakers.
The Dollar
The dollar index rose 0.3% today for another session, almost hitting 11-week highs at 104.69 against a basket of major rivals.
US non-farm payrolls surged past estimates in May, however wages were slower than expected and unemployment rose from recent 53-year lows, paving the way for the Fed to snap its policy tightening path.
Several Fed officials indeed said recently they'd prefer the Fed to stop its current path of policy tightening and conduct deeper studies on US economic conditions.
Bets on a US Fed rate hike now moved from June to July, with a 55% likelihood of a 0.25% rate hike at the July meeting.
Wall Street gains ground after Congress passed debt ceiling bill
US stock indices rose on Friday after Congress passed the bill raising the debt ceiling level, and following positive employment data.
Employment Data
Earlier data showed the US economy added 339 thousand new jobs in May, easily blistering through estimates of 193 thousand.
Unemployment however rose to 3.7% last month ,while analysts expected a drop to 3.4%.
US Debt Ceiling
Earlier today, US Senate passed the bill raising the US debt ceiling in order to avoid a catastrophic debt default.
US President Joe Biden lauded the successful vote to raise the debt ceiling until 2025, noting it's a big victory for the economy and US people.
On trading, Dow Jones rose 1.5% as of 15:49 GMT to 33,543, while S&P 500 rose 1.1%, or 48 points to 4,269, as NASDAQ added 0.8%, or 109 points to 13,203.
Oil prices keep recovering ahead of OPEC+ meeting
Global oil prices rose on Friday away from four-week lows ahead of OPEC+ meeting in the weekend.
Prices are buoyed by a weaker dollar against major rivals, making dollar-denominated commodities cheaper to holders of other currencies.
Concerns about US financial default have subsided as well after Congress approved a bill to raise the US debt ceiling.
Global Oil Prices
US crude rose 2.05% to $71.55 a barrel, while Brent climbed 2.1% to $75.77 a barrel, with a session-low at $74.23.
US crude rose 3.8% on Thursday, the first profit in four days away from four-week lows at $67.08.
Brent rallied 2.9%, snapping a three-day losing streak when it touched May 4 lows at $71.54 a barrel.
OPEC+ Meeting
OPEC members are meeting in Vienna during the weekend with allies such as Russia to discuss fresh developments in the market and take decision on current production policies.
Signals about a new production cut remain mixed so far, with bank analysts believing it's unlikely for the organization to enact new production cuts.
The dollar index fell 0.2% on Friday, sharpening losses for another session and plumbing one-week lows at 103.38 against a basket of major rivals.
Dollar is also backing off 11-week highs as risk appetite improves in the markets after the passage of the bill raising US debt ceiling on Congress.
Fed Remarks and Rates
A batch of recent remarks by several Fed officials were rather bearish with signals of ceasing rate hikes in June.
Such remarks caused pricing for a 0.25% Fed rate hike in June to collapse from 65% to just 23%.