Gold backs off two-week high on profit-taking

Gold prices fell in European trading on Monday, retreating from a two-week high reached earlier in the Asian session. The decline came amid profit-taking and a rebound in US dollar strength across currency markets.

Weaker-than-expected US jobs data has increased the likelihood of a Federal Reserve rate cut in September. Investors now await further economic releases and commentary from Fed policymakers to reassess those expectations.

Price Overview

•Gold prices dropped 0.55% to $3,345.14, down from the session’s opening at $3,363.34. The day’s high reached $3,366.15 — the strongest level since July 25.

•On Friday, gold gained 2.2%, its second consecutive daily rise and the biggest single-day gain since June 2, as prices recovered from a four-week low at $3,268.89.

•Beyond bargain buying, Friday’s gains were driven by weak US labor market data and renewed trade tariff concerns involving Trump’s administration.

US Dollar

The US Dollar Index rose 0.3% on Monday, attempting to recover from Friday’s steep losses and reflecting renewed demand for the greenback against a basket of major currencies.

The rebound comes as markets await stronger evidence supporting or refuting the likelihood of a Fed rate cut in September, especially amid continued comments from Fed officials.

US Interest Rate Outlook

•US job growth slowed more than expected in July, with non-farm payrolls rising by 73,000, following a downwardly revised 14,000 increase in June.

•According to CME’s FedWatch tool, the probability of a 25-basis-point rate cut in September rose from 43% to 75%, while the odds of rates staying unchanged dropped from 57% to 25%.

•Expectations for a 25-basis-point cut in October also climbed — from 64% to 95% — while the odds of holding rates steady dropped from 36% to just 5%.

•Following the disappointing jobs data, traders are now pricing in roughly 63 basis points of Fed easing by December, up from 35 basis points previously.

Gold Market Outlook

Tim Waterer, Chief Market Analyst at KCM Trade, stated: “Gold has seen a soft start to the week after Friday’s rally. A mix of profit-taking and dollar stabilization has caused a slight dip in prices at the beginning of the week.”

SPDR Gold Trust Holdings

SPDR Gold Trust — the world’s largest gold-backed ETF — saw holdings decline by 1.43 metric tons on Friday, marking the third consecutive daily drop. Total holdings fell to 953.08 metric tons, their lowest level since July 21.