Gold powers higher on renewed rate cut hopes, Middle East uncertainty (NYSEARCA:GLD)

Gold futures rise ~1% in the wake of improved hopes for U.S. interest rate cuts following Friday’s release of promising economic data, after the metal’s first back-to-back weekly losses since February.

The U.S. private sector added jobs in April at a slightly slower pace than expected, adding to evidence the economy is gradually slowing, positive news for investors hoping the Federal Reserve will ease monetary policy.

Goldman Sachs says it continues to expect two rate cuts this year, in July and November, following the April employment report that was soft but not weak.

Additionally, central banks led by China are continuing to increase their reserve gold allocation, potentially to divest away from the U.S. dollar, Bank of America analysts say.

“The downside that we’ve seen over the last few weeks might actually be running out of steam, opening [the] door for gold prices to resume their upward trajectory,” TD Securities strategist Daniel Ghali says, according to Reuters.

Front-month Comex gold (XAUUSD:CUR) for May delivery settled +1% to $2,321.60/oz, and front-month May silver (XAGUSD:CUR) closed +3.5% to $27.369/oz, highest in a week for both benchmarks.

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Gold also enjoyed support from ongoing tensions in the Middle East, after Israel launched strikes on the southernmost city of Rafah, where hundreds of thousands of civilians have taken refuge.

The strikes reportedly began after Hamas said it had approved a ceasefire proposal to halt the war in Gaza.