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Gold Prices Rise Amid Dollar Weakness as Weak Payrolls Data Increase Rate Cut Expectations

Gold prices climbed in Asian trading on Monday, capitalizing on the recent decline in the dollar following softer-than-expected U.S. payrolls data, which led traders to increase their bets on potential interest rate cuts by the Federal Reserve.

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However, gains in gold were somewhat restrained by improved risk appetite among investors, who shifted towards more risk-exposed assets such as stocks in the aftermath of Friday’s nonfarm payrolls data.

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Spot gold rose by 0.4% to $2,310.05 an ounce, while gold futures expiring in June also increased by 0.4% to $2,318.70 an ounce by 00:31 ET (04:31 GMT).

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The rise in gold prices came after the precious metal experienced a sharp decline from record highs over the past three weeks. Concerns about sustained high interest rates and diminishing safe-haven demand weighed on gold in recent sessions.

However, gold found some relief from the drop in the dollar, which experienced a 0.8% loss last week primarily due to Friday’s payrolls reading. This sparked increased speculation that the Federal Reserve might initiate rate cuts by September.

While a cooling labor market provides some rationale for the Fed to consider rate cuts, the main issue of contention remains sticky inflation. Despite this, inflation has been moving further above the Fed’s annual 2% target, causing traders to rethink their expectations for rate cuts this year.

High interest rates typically do not favor gold, as they increase the opportunity cost of investing in the precious metal.

This week, investors will closely monitor a series of addresses from top Fed officials for further insights into the direction of interest rates.

In other precious metals news, platinum futures fell by 0.3% to $962.60 an ounce, while silver futures surged by 1.7% to $27.130 an ounce.

Additionally, copper prices rose on Monday, nearing two-year highs as metal prices benefited from the weaker dollar. Three-month copper futures on the London Metal Exchange increased by 1.7% to $9,930.0 a ton, while one-month copper futures rose by 0.5% to $4.5888 a pound. Both contracts remained within sight of two-year peaks amid expectations of tighter markets due to metal sanctions against Russia and hopes of improving demand in China, the top importer of copper.

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