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Metals Stocks: Gold bounces back above $1,400 an ounce as traders await this week’s Powell testimony

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Gold futures traded modestly higher Monday, pushing back above $1,400 an ounce, as traders continue to weigh the scope for rate cuts by the Federal Reserve following last week’s stronger-than-expected round of June jobs data.

Gold for August delivery on Comex GCQ19, +0.27%  rose $7.70, or 0.5%, to $1,407.80 an ounce, while September silver SIU19, +0.66% was up 10.4 cent, or 0.7%, at $15.105 an ounce.

A Friday decline following the jobs data left the yellow metal negative for the week. The upbeat employment picture saw traders scale back expectations for rate cuts by the Federal Reserve, sharply reducing bets on a half-point cut when policy makers meet at the end of the month. A quarter-point reduction, however, remains widely expected.

“There is potential for a deeper downside correction if the Fed expectations were to become less dovish. The key support to the May-July positive trend is seen at $1,375, the major 38.2% Fibonacci retracement,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group, in a note, using a technical-analysis term based on so-called Fibonacci numbers, which occur throughout nature and that many chart-watchers see as useful in determining support and resistance levels.

Growing expectations for Fed rate cuts have been credited with lifting gold, which is up 9.8% so far this year and hit a six-year high last month. Lower rates are seen as supportive for the metal, which offers no yield, as they cut the opportunity cost of holding the metal.

Read: Worries on economy haven’t vanished after job gains, trade truce

Fed Chairman Jerome Powell is scheduled to provide his annual midyear update to lawmakers in a pair of hearings on Wednesday and Thursday that will be closely watched for further clues to policy makers’ thinking.

In other metals trading, October platinum PLV19, +0.54%  was up $4.90, or 0.6%, to $816.30 an ounce, while September palladium PAU19, -0.23%  fell $7.70, or 0.5%, to $1,556.50 an ounce.

July copper HGN19, +0.55%  was up 2.35 cents, or 0.9%, to $2.6845 a pound.