Gold and silver gained on Monday as the US dollar steadied near a two-week low, with investors scaling back bets on a Federal Reserve rate hike this year.

Gold was up 0.35% at press time, trading around $4,170, while silver added 0.23% to trade near $63. Both extended a rebound that began after Friday’s weak June jobs report reset expectations for interest rates.

Why Rate Bets Move the Metals

Gold and silver pay no income, so their appeal tracks the cost of holding cash. When markets expect higher rates, the opportunity cost of holding metal rises. Falling rate expectations reverse that math.

The shift followed the June payrolls data. The US economy added just 57,000 jobs, roughly half the 113,000 forecast. Revisions cut April and May hiring by a combined 74,000. The unemployment rate fell to 4.2%. 

The dollar absorbed the repricing. The US Dollar Index (DXY) steadied near a two-week low, holding below 101 after its steepest weekly decline since April.

What the Rate Repricing Shows

CME’s FedWatch tool put the odds of a July hike at 21.9% as of the latest data. A week earlier, the figure stood at 29.9%. The probability of a hold rose to 78.1%.

September told a similar story. Cumulative odds of at least one hike fell to 53% from 59.4% a week earlier. Meanwhile, the chance of two hikes dropped to 8.7% from 12.6%.

Meanwhile, Federal Reserve Chair Kevin Warsh also told the European Central Bank forum in Sintra that inflation risks had eased, while reaffirming the commitment to price stability.

Traders now turn to fresh data. The Fed minutes land this week. In addition, the June inflation print on July 14 will shape up as the next major test.

Source: BeInCrypto