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Decline in US Job Openings Bolsters Bets on Fed Rate Cut

2 weeks ago

Markets are shifting their focus to a series of labor-market readings this week, including Friday’s US jobs report, for further clues on when the Federal Reserve might deploy rate cuts. Early Wednesday, gold prices attempted a tepid rebound toward $2,340, having tested a three-week low of $2,315 a day earlier.

Investors are now closely watching the top-tier US ADP jobs and ISM Services PMI data for fresh cues on the Fed’s interest rate outlook, which is likely to significantly impact the non-interest-bearing gold price. Gold found its footing in Asian trading on Wednesday as the US dollar lost its recovery momentum, boosted by improved risk sentiment following upbeat China’s Caixin Services PMI data. The Caixin Services PMI jumped to 54.0 in May from 52.5 in April, surpassing market expectations of 52.6.

Currently, markets are pricing in about a 56% chance of a 25 basis points Fed rate cut in September, up from a 52% probability earlier this week. Renewed dovish expectations for the Fed could continue to undermine the US dollar and revive bullish sentiment around gold prices, especially if the US ADP jobs and ISM Services PMI data disappoint later on Wednesday.

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