Gold prices rise due to weakened dollar and soft US jobs data, silver jumps 2.4%

Gold prices surged by over 1%, buoyed by a weakening U.S. dollar following subdued U.S. jobs data, on Monday. This prompted speculation of potential interest rate cuts by the Federal Reserve in the coming months. 

Spot gold experienced a rise of 0.8%, reaching $2,320.95 per ounce by 1503 GMT. Additionally, U.S. gold futures for June delivery saw an uptick of 0.9%, reaching $2,329.70 per ounce.

Also read: China's gold consumption rose 6% in first quarter this year; what is driving the rally?

"The downside that we've seen over the last few weeks might actually be running out of steam, opening (the) door for gold prices to resume their upward trajectory," Daniel Ghali, commodity strategist at TD Securities, was quoted as saying Reuters.

What's driving the rally?

On Friday, data revealed that job growth in the U.S. decelerated more than anticipated in April, with the rise in annual wages dropping below 4.0% for the first time in nearly three years.

Although gold is typically regarded as a safeguard against inflation, reduced interest rates diminish the opportunity cost of holding bullion and exert downward pressure on the dollar, the currency in which gold is denominated.

On Monday, the U.S. dollar experienced a slight decline, having remained close to its lowest point in approximately a month on Friday, influenced by the employment report. According to CME's FedWatch Tool, the probability of rate cuts in September surpassed 69% on Monday. Additionally, gold received a boost from continued tensions in the Middle East, with Israel's military action in Rafah introducing an additional element of uncertainty into the market.

Back home, gold prices in the national capital rose by ₹230 to reach ₹72,250 per 10 grams on Monday, driven by an increase in the rates of precious metals in the global markets, according to HDFC Securities. In the prior session, the price of the yellow metal had closed at ₹72,020 per 10 grams.

Also read: Gold rate today jumps after disappointing US non-farm payroll data, slide in US dollar rate, Xi Jinping's Europe trip

“Gold prices surged over 500 rupees in MCX to hit 71,200 due to renewed conflict in the Middle East and weak US jobs data. This data increased expectations of an earlier US interest rate cut, which is positive for gold prices. The forecast is for gold to trade in a range of 70,000 to 72,500 in the near future,” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

Additionally, other valuable metals made gains, as spot silver saw a 2.4% increase to $27.19 per ounce, platinum edged up by approximately 0.6% to $960.95, and palladium rose by 3.6% to $979.95.