By Barani Krishnan
Investing.com - Bullion and futures of gold rallied for an eighth-straight day to 14-month highs Friday, boosted by bets that the Federal Reserve will have to cut interest rates after a weak U.S. jobs data for May.
Fed Chairman James Powell assured markets earlier this week the central bank will do whatever it takes to shield the U.S. economy from recession owing to trade wars and also preserve nearly a decade of record growth.
Spot gold, reflective of trades in bullion, traded at $1,340.64 per ounce by 3:25 PM ET (19:25 GMT), up $5.10, or 0.4%, on the day. It earlier scaled an April 2018 high of $1,348.34.
Gold futures for August delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $3.40 at $1,346.10 per ounce. The session peak was $1,352.55, a high since February.
The August gold contract has gained nearly $70, or almost 5.5%, since its last negative settlement on May 28. The Comex contract has gained 3% so far on the month, putting June on track to be its best month in six.
Gold pundits mostly see August gold piercing $1,400 between now and before the Federal Open Market Committee's June 18-19 meeting. (The FOMC is the Fed's rate-making body.) While the central bank is not expected to cut rates then, traders will be closely watching the language in its statement to gauge how dovish it is and whether an easing could be expected in coming months.
Fed funds futures markets are pricing in at least a half-point cut this year and another 40 basis points in 2020.
“This has been a great week for gold,” said George Gero, precious metals analyst at RBC Wealth Management in New York.
Gero said “good jobs numbers (hereon) may not hold back the Fed from easing anyway” as the central bank’s greater priority was to shield the U.S. economy from the negative effects of the Trump administration’s trade wars with Mexico and China.
The administration’s first 5% tariff on Mexico, a country which does $1.7 billion of trade with the U.S. daily, begins Monday. President Donald Trump has said he would raise tariffs on Mexico until they reached 25% unless the country stop the flow of undocumented people and drugs crossing from its side of the border into the U.S.
But Trump tweeted today that he thinks a deal with Mexico can be reached.
Elsewhere in metals, automotive component palladium managed to stay ahead of gold once again to retain its mantle as the world’s costliest metal.
Spot palladium rose $10.55, or 0.8%, to $1,363.80 an ounce.
Trades in other Comex metals as of 3:25 PM ET (19:25 GMT):
Palladium futures up $5.70, or 0.4%, at $1,354.80 per ounce.
Platinum futures up $2.45, or 0.3%, at $806.15 per ounce.
Silver futures up 1 cent at $15.01 per ounce.
Copper futures down 3 cents, or 1.2%, at $2.62 per pound.