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Gold Drifts Lower as Investors Focus on US Jobs Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
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Gold Drifts Lower as Investors Focus on US Jobs Data

A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk
A view shows ingots of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk

Gold fell on Tuesday after rising 1% in the previous session as investors awaited US jobs data due later in the week for further clues on the health of the labor market and if it will deter the Federal Reserve from cutting rates in September.
Spot gold was down 0.5% at $2,335.97 per ounce, as of 0826 GMT. Prices touched their lowest level in nearly a month on Monday before settling 1% higher.
US gold futures were down 0.6% at $2,355.50.
ADP employment report is due on Wednesday before Friday's non-farm payrolls data, said Reuters.
"If the payrolls data comes above 200,000, which is kind of very rosy, then gold prices might slide further and even break that $2,320 support level," said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.
"We do see technical factors that are still positive at least in the near term because it's still being supported at the $2,320 support level, with yesterday's bounce reinforced by weaker-than-expected manufacturing numbers, which also caused the yields to fall."
Meanwhile, in major gold consumer India, share markets sold off sharply after early vote counting showed Prime Minister Narendra Modi's Bharatiya Janata Party (BJP)-led alliance was not headed for a landslide win as predicted.
"Just before the election results are out or during the election period, demand for gold will be subdued because of the restriction on cash transactions," said ANZ commodity strategist Soni Kumari.
"So once the election is over, we can expect some kind of pent-up demand because the wedding season is still not yet over," Kumari said, adding that if equities continue to crash, there will be some funds going into gold as well.
Among other precious metals, spot silver fell 2.5% to $30.01 per ounce, platinum was down 0.4% at $1,008.00 and palladium lost 0.3% to $915.00.
"The Modi government is focusing more on industrial growth like solar (projects). As industrial demand is improving, silver should benefit," said Ajay Kedia, director at Kedia Commodities, Mumbai.

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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
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British Assets Gain, Mid-cap Stocks Lead after Labour Election Win

A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights
A view of the Palace of Westminster which houses Britain's parliament, during the general election, in London, Britain, July 5, 2024. REUTERS/Hannah McKay Purchase Licensing Rights

British domestic-focussed mid-cap stocks were the biggest gainers on Friday after the centre-left Labour Party surged to a comprehensive win in a parliamentary election with blue chip stocks, government bond prices and the pound higher.

Hopes that the incoming government will provide a period of economic stability after an often tumultuous 14 years of Conservative Party rule sent the FTSE 250 midcap index (.FTMC), up as much as 1.8% in early trading to its highest since April 2022.

The blue chip FTSE 100 index (.FTSE), was last up 0.2% and the yield on 10-year British government bonds or gilts, dropped 3 basis points to 4.17%, marginally better than other European markets, Reuters reported.

Labour won a massive majority in the 650-seat parliament while Rishi Sunak's Conservatives suffered the worst defeat in the party's long history as voters punished them for a cost of living crisis, failing public services, and a series of scandals.

"A landslide victory provides the sort of clarity and stability that equity markets need in an increasingly volatile world," said Ben Ritchie, head of developed market equities at abrdn.

"If the new government gets this right, businesses with significant exposure to the UK economy should be the likely winners - a shot in the arm in particular for companies in the FTSE 250 and FTSE Small Cap".

British home builders stood out, with an index tracking their shares up 2.3%.

"We think the formation of a Labour-majority government will have a positive impact on housebuilders and construction materials," said Aruna Karunathilake, portfolio manager at Fidelity.

"We expect Labour to reinstate housebuilding targets and perhaps also fund investment in local planning departments... That should alleviate builders’ concerns about planning bottlenecks impeding growth in the medium term."

Analysts at Goldman Sachs said that while Labour's manifesto policies imply relatively limited changes to fiscal policy they would modestly boost demand in the near term.

As a result, they raised their forecasts for British GDP growth by 0.1 percentage points in each of 2025 and 2026.