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Gold gains as Fed rate cut bets hold, growth concerns linger

Published 2019-07-08, 08:11 a/m
© Reuters.  Gold gains as Fed rate cut bets hold, growth concerns linger
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* Fed's Powell could provide cues on near-term policy this week

* SPDR Gold holdings fell 0.2% on Friday

By Eileen Soreng

July 8 (Reuters) - Gold firmed above $1,400 an ounce on Monday, helped by expectations the U.S. Federal Reserve would stay on course with an interest rate cut this month despite robust U.S. jobs data and as global growth concerns linger.

Spot gold XAU= was 0.4% higher at $1,404.58 per ounce at 1205 GMT. U.S. gold futures GCv1 climbed 0.5% to $1,407.4 an ounce.

"The Fed is likely to cut interest rates as early as this month and in that environment, gold as a non-yielding asset ought to do better and would be more attractive to investors in a world of lower interest rates," said Mitsubishi analyst Jonathan Butler.

The forecast-beating job gains ended the chances for a steep Fed rate cut at its July 30-31 meeting, although modest wage gains and other data showing the world's largest economy was losing steam, meant the central bank was still expected to cut rates by a quarter point. gains, helped in part by subdued global stocks, helped gold recover slightly from a more than 1% decline on Friday following the U.S. jobs data. USD/ MKTS/GLOB

"The resilience of bullion, which was able to quickly recover above $1,400 despite better than expected U.S. data, is confirming the huge interest of investors for gold in this scenario," Carlo Alberto De Casa, chief analyst with ActivTrades, wrote in a note.

"The psychological threshold of $1,400 is now working as a support, while $1,440 is the new key resistance level."

Fed Chairman Jerome Powell is expected to provide further cues on the near-term outlook for monetary policy this week at his semi-annual testimony to the U.S. Congress on the economy. rate cut by the Fed could also prompt China's central bank to cut its benchmark policy rate for the first time in four years to support a slowing economy, analysts say, joining other major economies in easing monetary policy. interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

"We've got a period of heightened concern around global growth at the moment, which makes gold seem an attractive option as diversifier," said Capital Economics analyst Ross Strachan.

Meanwhile, holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.18% to 796.97 tonnes on Friday from 798.44 tonnes on Wednesday. GOL/ETF

Among other precious metals, silver XAG= gained 0.7% to $15.08 per ounce, while palladium XPD= dipped 0.3% to $1,561.19 and platinum XPT= rose 1% to $812.62 per ounce.

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