Investing.com - Gold prices inched up in European trade on Monday, hovering below a 28-month high amid speculation the Federal Reserve will remain cautious on interest rates despite last week's strong jobs report.
Gold for August delivery on the Comex division of the New York Mercantile Exchange tacked on $5.45, or 0.4% to trade at $1,363.85 a troy ounce by 06:50GMT, or 2:50AM ET.
In the U.S. on Friday, the Department of Labor said the economy added 287,000 jobs in June, blowing past expectations for 175,000 and the largest gain since October. However, May's payroll count was revised down to only an 11,000 increase from the previously reported 38,000.
The report also showed that the unemployment rate ticked up to 4.9% last month from 4.7% in May, compared to expectations for a rise to 4.8%.
Meanwhile, average hourly earnings rose 0.1% last month, disappointing expectations for a 0.2% gain. This lack of inflationary pressure implies that the Fed can still wait to move on interest rates.
Despite the better-than-expected jobs report, markets remained skeptical about the odds of a rate hike this year. The CME Group's (NASDAQ:CME) FedWatch tool is currently pricing in just a 24% of a rate hike by December.
Gold surged to $1,377.50 last week, a level not seen since March 2014, as uncertainty surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
Prices of the yellow metal are up nearly 30% so far this year amid fading expectations of a Federal Reserve rate hike and as expectations mounted that central banks around the world will step up monetary stimulus to counteract the negative economic shock from the Brexit vote.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Also on the Comex, silver futures for September delivery jumped 35.8 cents, or 1.78%, to trade at $20.45 a troy ounce during morning hours in London, while copper futures advanced 3.8 cents, or 1.79%, to $2.157 a pound.
China published weaker than expected inflation data over the weekend, reinforcing views that more government stimulus steps will be needed to support the economy.
The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.
In the week ahead, market players will be turning their attention to key economic data out of China, with Friday’s second quarter GDP report in the spotlight.
Thursday’s rate decision and monetary policy meeting minutes from the Bank of England will also be in focus, amid mountings expectations for additional stimulus in wake of the U.K.’s Brexit vote.
In the U.S., investors will eye retail sales and inflation data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
This week also marks the start of the second quarter earnings season in the U.S.