On June 4th, gold prices experienced a slight increase due to weaker – than – expected US economic data, fueling speculation that the Federal Reserve will cut interest rates at least twice this year. By the close of trading, COMEX gold futures rose by 0.60% to $3,397.40 per ounce. In the Asian session, the gold ETF ChinaAMC (518850) dropped by 0.11%, while the gold Stock ETF (159562) increased by 0.89%.
US Economic Data Highlights
The ADP employment in the United States increased by only 37,000 in May, significantly lower than the expected increase of 110,000 and the previous value of an increase of 62,000. This marks the lowest level of recruitment in the US since March 2023. Additionally, the US ISM non – manufacturing PMI for May was 49.9, contracting for the first time in nearly a year. The forecast was 52.0, and the previous value was 51.6.
Market Analysis and Expectations
Relevant analysis indicates that the US May ADP mini – non – farm payroll data and the ISM non – manufacturing index were both weaker than market expectations. The services PMI falling below the boom – bust line for the first time in a year highlights that the US tariff policy has begun to impact the real economy. This has triggered a revision in the financial market regarding the Fed’s interest rate cut path.
According to the CME FedWatch tool, the market now expects that the probability of a rate cut in July has slightly increased to around 30%, while the probability of a rate cut in October has significantly increased. There may be 2 – 3 rate cuts within the year. The Federal Reserve’s economic situation survey report shows that a slight decline in economic activity in the United States and an increase in policy uncertainty have increased the demand for precious metals.
Impact of Tariffs and Trade Tensions
The increase in tariffs on steel and aluminum has exacerbated trade tensions, pushed up production costs and price pressures, and made investors more inclined to avoid risks. The transfer of tariff costs by manufacturing enterprises to consumers has further strengthened the demand for safe – haven assets.
Technical Analysis of Gold Prices
Technically, gold prices are poised to challenge the $3,400 mark. The recent rebound in gold prices is supported by the weaker US economic data and rising rate cut expectations. The market is closely monitoring the upcoming Federal Reserve meetings and economic indicators for further guidance on interest rate movements.
Conclusion
The rebound in gold prices on June 4th reflects the market’s response to weaker – than – expected US economic data and the increasing likelihood of Federal Reserve rate cuts. The combination of economic slowdown, policy uncertainty, and trade tensions has driven investors towards safe – haven assets, pushing gold prices higher. As the market awaits further clarity on the Fed’s monetary policy path, gold remains a key asset for risk – averse investors.
Related Topics:
