Gold Remains Steady Near Monthly High Amid Fed Rate-Cut Buzz

On Monday, gold prices eased slightly but remained close to the more than one-month high reached in the previous session, following softer U.S. economic data that boosted expectations of a Federal Reserve interest rate cut in September. Spot gold was down 0.2% at $2,385.88 per ounce as of 0235 GMT, after reaching its highest level since May 22 on Friday. U.S. gold futures fell 0.1% to $2,394.50.

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Friday's data showed that the unemployment rate had hit a 2-1/2-year high of 4.1%, indicating a weakening labor market. This week, market attention is on Fed Chair Jerome Powell's semi-annual Congressional testimony, remarks from various Fed officials, and U.S. inflation data.

According to Matt Simpson, a senior analyst at City Index, Friday's weak jobs report contributed to gold's best week in three months. A soft U.S. inflation report and a dovish tone from Powell during his testimony could potentially drive gold prices to new highs.

CME's FedWatch Tool indicates a 78% chance of a rate cut by the Fed in September, with traders also pricing in a growing likelihood of a second rate cut in December. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

However, news that China's central bank did not purchase gold for its reserves for the second consecutive month in June has capped bullion prices. Simpson noted that while China may have paused its gold purchases, overall demand remains strong, which could keep gold on bullish watchlists and encourage bullish bets on any price dips.

Spot silver fell 0.2% to $31.14 after hitting a one-month peak in the last session. Platinum edged 0.5% lower to $1,021.45, and palladium slipped 1.7% to $1,008.51.

In India, gold prices declined on Monday after several days of increases, providing some relief to buyers. Meanwhile, U.S. gold prices dipped on July 8 but continued to trade near a more than one-month high, supported by expectations of a Fed interest rate cut in September due to softer U.S. data.