Investors await U.S. nonfarm payrolls data Friday to assess Fed’s interest rate strategy
Gold prices saw a slight increase on Thursday, bolstered by a retreat in the U.S. dollar. Investors are keenly awaiting the U.S. nonfarm payrolls data set to be released on Friday to evaluate the Federal Reserve‘s interest rate path, particularly amid escalating global trade tensions.
In the UAE, gold rates saw a slight increase of AED0.25 today. The price for 24-carat gold is now AED351.5, while 22-carat gold remains steady at AED327. Additionally, 21-carat gold rose by AED0.25 to AED313.75, and 18-carat gold is priced at AED268.75.
Spot gold rose 0.1 percent to $2,921.19 an ounce by 0625 GMT, while U.S. gold futures also increased by 0.1 percent to $2,929.30. The dollar index remained near a four-month low as the U.S. granted automakers a one-month exemption from the 25 percent tariffs on Canada and Mexico, provided they adhere to existing free trade regulations.
U.S. President Donald Trump has expressed a willingness to consider additional products for tariff exemptions, according to the White House. Trump’s tariffs have created strains in relations with Canada, Mexico, and China. In response, both Canada and China have implemented their own tariffs on selected U.S. imports, while Mexico has pledged to retaliate. Concerns over Trump’s tariff strategies have propelled safe-haven gold to a record high of $2,956.15 on February 24, contributing to an over 11 percent increase year-to-date. Gold remains a favored hedge against political uncertainties and inflation.
Employment data shows mixed signals
Data released by ADP Research indicated that the U.S. private sector added 77,000 jobs in February, following the creation of 186,000 jobs in January. This figure fell significantly short of the anticipated 140,000. However, the Institute for Supply Management (ISM) Services PMI increased to 53.5 in February, surpassing forecasts of 52.6. Meanwhile, the ISM Services Employment Index rose to 53.9 in February from 52.3 in January.
Read more: UAE gold prices dip AED1.25, global rates rise amid Trump tariffs
Euro strengthens amid political developments
The Euro (EUR) surged to a four-month high against the U.S. dollar (USD), in line with the rise in German bund yields after political parties in Germany reached an agreement on a substantial spending plan aimed at bolstering the Eurozone’s largest economy. The increase in German bund yields has driven global yields upward, including U.S. Treasury bond yields, which could limit the recovery of the gold price.
Market anticipates key payrolls report
The market is now focusing on the upcoming non-farm payrolls report, which is expected to reflect a gain of 160,000 jobs for February. Spot silver decreased by 0.1 percent to $32.6 an ounce, platinum remained stable at $965.6, and palladium rose by 0.2 percent to $944.00.
In the interim, the mid-tier U.S. Jobless Claims data and any further developments regarding tariffs from the Trump administration will be closely monitored for their potential impact on the USD’s performance and gold price movement. The forthcoming European Central Bank (ECB) policy decision could dampen the EUR/USD rally and trigger a rebound in the U.S. dollar. Should this occur, a corrective move lower in gold price could follow, interpreted as a profit-taking decline ahead of the crucial U.S. payrolls data on Friday.
Copper reaches three-week high on China stimulus, dollar decline
Copper prices increased on Thursday, reaching a three-week high as the dollar weakened.
Adding to the positive sentiment, new economic stimulus measures from China enhanced market optimism, coinciding with the country’s annual parliamentary meetings, known as the “Two Sessions.”
During the National People’s Congress on Wednesday, China introduced a comprehensive stimulus package designed to support economic growth amid rising trade tensions with the U.S. Key measures included an economic growth target of around 5 percent, an increase in the budget deficit to 4 percent to fund consumer goods programs, and the issuance of 1.3 trillion yuan (approximately $179 billion) in ultra-long special treasury bonds.
Investors are anticipating potential policy measures aimed at boosting infrastructure and manufacturing, which are crucial sectors for copper demand.
Benchmark Copper Futures on the London Metal Exchange rose by 0.3 percent to $9,611.05 per ton, marking their highest level since mid-February. Copper Futures expiring in April dropped by 0.7 percent to $4.7718 per pound.
Trump’s economic defense
In a 100-minute-long address to Congress, Trump yesterday defended his economic plans and called for a wide range of tax cuts and spending reductions, while also repeating the administration’s intention—on national security grounds—to slap a 25% tariff on imports of aluminium, steel, and, importantly, copper. HG copper futures traded in New York surged over 5% after Trump suggested imports of the metal would also be subject to the high tariff—a move that, if implemented, would drive the premium in the New York markets well above the international price references in London and Shanghai. The initial response saw HG copper futures jump to trade at a 10% premium to prices on the London Metal Exchange (LME), before arbitrage activity saw traders step in to take advantage of the wide and potentially premature spike.f
While the US president has already signed an executive order to impose that levy on aluminium and steel from 12 March, the copper market may have seen a premature reaction, in the sense that an investigation carried out under Section 232 of the Trade Expansion Act normally takes months to be completed. This means the impact on prices will take longer to be felt than what is currently being priced in.
Tariff impact on metals
“In today’s trading, we have seen the cash-to-futures spread in silver widen again as traders take note of surging copper prices in New York, especially given the still-unresolved question of whether silver will also be impacted by tariffs. Gold, meanwhile, has stabilised following a massive transfer that has seen COMEX exchange-monitored stocks surge to levels last seen during the 2021 Covid-19 disruption to transatlantic flows,” remarked Ole Hansen, head of Commodity Strategy, Saxo Bank, to Economy Middle East.
“We maintain our long-held bullish outlook for copper, given the energy transition that will lead to surging demand for power—particularly towards electric vehicles (EVs), data centres, and cooling, as temperatures rise across the world. However, in this context, we view current price levels as non-representative of current supply and demand fundamentals, merely reflecting the need to shift metals around the world to avoid tariffs. Inadvertently, in the short term, this may have a slightly negative impact on the overall global demand outlook,” said Hansen.
Hansen further noted, “Looking ahead, and until the level of tariff becomes official, the US copper market will likely exhibit a greater level of volatility—some of which will filter through to London—as the worldwide hunt for copper that can be shipped to the US before any tariffs are imposed will support prices. The LME exchange will experience a draw on inventories, which is already being reflected in the spot-to-three-month spread. Following a long period of ample supply, the spread traded at a wide contango—an expression of a well-supplied market—but has now tightened to flat for the first time in 18 months.”
