Gold prices rise on growing expectations of rate cut and increased uncertainty in the Middle East.

Gold futures saw a significant increase of around 1% as optimism grows for potential U.S. interest rate cuts.This surge comes after gold faced its first consecutive weekly losses since February. The positive outlook was driven by the release of promising economic data on Friday, which hinted at a potential slowdown in U.S.private sector job growth for April. This data suggests a gradual weakening of the economy, which could lead to the Federal Reserve making monetary policy adjustments, much to the satisfaction of investors. Goldman Sachs is standing by its forecast of two rate cuts later this year, set for July and November.

This prediction is backed by the softer-than-expected April employment report, which, while not disappointing, suggested a more modest job growth trend. At the same time, central banks led by China are actively increasing their gold reserves, possibly as a strategic move away from the U.S. dollar, as noted by Bank of America analysts. This shift in gold allocation could have significant implications for the global financial scene. TD Securities strategist Daniel Ghali shared his positive outlook on gold prices, anticipating a reversal of the recent downward trend and a return to an upward trajectory.

This sentiment was mirrored in the closing prices of front-month Comex gold, settling at +1% to $2321.60/oz, and front-month May silver, closing at +3.5% to $27.369/oz, marking a one-week high for both commodities. In addition to these factors, gold also got a boost from escalating tensions in the Middle East, with Israel launching airstrikes in Rafah, where many civilians had sought shelter. This geopolitical uncertainty added to the bullish sentiment surrounding the precious metal.