Gold Jumps after Cooling US Jobs Report Boosts Rate Cut Hopes

Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/File Photo
Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/File Photo
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Gold Jumps after Cooling US Jobs Report Boosts Rate Cut Hopes

Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/File Photo
Marked ingots of 99.99 percent pure gold are placed in a cart at the Krastsvetmet non-ferrous metals plant in the Siberian city of Krasnoyarsk, Russia March 10, 2022. REUTERS/Alexander Manzyuk/File Photo

Gold prices hit their highest in over two weeks on Friday as Treasury yields and the dollar declined after data showed US economy created fewer jobs than expected in July, boosting hopes of rate cuts by the Federal Reserve this year, Reuters reported.

Spot gold was up 0.8% at $2,464.32 per ounce as of 1320 GMT, just $19 shy of the record peak of $2,483.60 scaled on July 17. US gold futures climbed 1% to $2,506.60.

"The drop in yields along with the reaffirmation that there is a cut in September just makes gold a lot more attractive," said Alex Ebkarian, chief operating officer at Allegiance Gold.

US 10-year yields dropped to their lowest since December and the dollar hit its lowest since March after data showed that employers added fewer jobs in July than economists had forecast, while the unemployment rate increased to 4.3%.

The data follows comments from Fed Chair Jerome Powell who on Wednesday said that rates could be cut as soon as September if the US economy follows its expected path.

Gold has gained 3.2% so far this week, on track for its best week since April, as rising safe-haven demand from Middle East tensions and expectations of rate cuts made the metal more appealing for investors.

Bullion is traditionally considered a hedge against geopolitical and economic risks, and lower interest rates reduce the opportunity cost of holding the asset.

"The marketplace just now is factoring in a better-than-70% chance for a 50-basis-point cut by the Fed at the September FOMC meeting," said Jim Wyckoff, senior market analyst at Kitco Metals in a note.

Elsewhere, spot silver added 1.2% to $28.88 per ounce, platinum rose 1.3% to $971.20 and palladium dropped 0.4% to $901.82. All three metals were headed for weekly gains.



Petrochemical Recovery Boosts Saudi SABIC’s Profits by 84.7%

SABIC’s technical center in Shanghai, China (company website)
SABIC’s technical center in Shanghai, China (company website)
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Petrochemical Recovery Boosts Saudi SABIC’s Profits by 84.7%

SABIC’s technical center in Shanghai, China (company website)
SABIC’s technical center in Shanghai, China (company website)

Saudi Basic Industries Corp (SABIC), one of the world’s biggest petrochemical companies, beat analysts’ forecasts in the second quarter, indicating a recovery in the petrochemical sector.
SABIC, 70% owned by Aramco, posted a profit of SAR 2.18 billion ($581 million), significantly higher than the expected SAR 859.5 million. This represents an 84.7% jump from the previous year.
The company attributed the rise to better product margins and reiterated its commitment to improving its strategic portfolio and restructuring weak assets.
The global petrochemical industry is recovering after a tough 2023, characterized by slow demand growth and overproduction.
SABIC credited its growth to a 32% rise in gross profit to SAR 1.76 billion ($469 million), due to better margins on key products, though higher operating expenses from one-off charges partly offset this.
Additionally, reversing a Zakat provision resulted in non-cash gains of SAR 545 million in Q2, up from SAR 440 million in the same period in 2023, due to recent regulatory updates.

Global trade showed signs of recovery, driven by higher exports, inventory restocking and increased financial activities, said SABIC CEO Abdulrahman Al-Fageeh.
As inflationary pressures ease some central banks have begun reducing interest rates, potentially providing additional stimulus to the global economy, he added.
Mohammed Al-Farraj, Senior Asset Management Director at Arbah Capital, stated that improved profit margins boosted SABIC’s earnings despite higher operating expenses in Q2.
Speaking to Asharq Al-Awsat, Al-Farraj highlighted potential future challenges for SABIC, including price volatility, as its profits depend heavily on fluctuating raw material and product prices.
He also mentioned intense competition in the petrochemical industry and changes in the global economy.
Al-Farraj added that anticipated interest rate cuts by the US Federal Reserve could further grow SABIC’s profits in the second half of the year by reducing borrowing costs and encouraging investment in new projects and expansion.
Former senior advisor to the Saudi Energy Minister, Dr. Mohammed Al-Sabban, predicted a recovery in the petrochemical sector, driven by increased demand from Asian countries, especially China.
He noted that despite current economic fluctuations in China, government efforts to avoid a recession are expected to succeed by the fourth quarter, with a more significant recovery in 2025.
Al-Sabban told Asharq Al-Awsat that the recovery will be supported by other developing countries, leading to gradual price increases, benefiting Saudi petrochemical companies. He expressed optimism about continued sector growth in the coming phase.