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Gold declines before decisive US data
AI Summary
- Gold prices fell due to a rebound in the US dollar levels, ahead of key US economic data releases and Federal Reserve comments.
- The US dollar index rose by 0.2%, reflecting a recovery against major and minor currencies, with high probabilities of US interest rate cuts in September and October.
- Investors are awaiting important US economic data releases to reassess probabilities, while gold prices are expected to rise with a weaker dollar and positive technical outlook.
Gold prices fell in the European market on Thursday for the first time in the last three days, pressured by a rebound in US dollar levels in the foreign exchange market, ahead of key US economic data releases.
These crucial data, along with comments from Federal Reserve officials, will provide new clues about the likelihood of US interest rate cuts in September and October.
Price Overview
•Gold prices today: The price of gold declined by 0.4% to $3,341.75, from the opening level of $3,355.76, recording a high of $3,374.88.
•At Wednesday’s close, gold prices rose by 0.25%, marking a second consecutive daily gain, supported by a decline in the US currency.
US Dollar
The US dollar index rose on Thursday by 0.2%, rebounding from a two-week low of 97.62 points, heading for its first gain in the last three sessions, reflecting the recovery of the US currency against a basket of major and minor currencies.
US Interest Rates
•According to the CME Group’s FedWatch tool: The probability of a 25-basis point US interest rate cut in September is currently priced at around 99%, with a 1% probability of no change.
•The probability of a 25-basis point US interest rate cut in October is also currently priced at 99%, with a 1% probability of no change.
Key Data Ahead
To reassess these probabilities, investors are awaiting the release later today of important US economic data, including July producer prices and weekly jobless claims.
Gold Outlook
•Kyle Rodda, market analyst at Capital.com, said: “Markets are factoring in the possibility of a 50-basis point Fed interest rate cut in September. Therefore, with a weaker dollar and rising gold prices as a result, yields have also fallen.”
•Rodda added: “The technical outlook for gold looks very positive. The trend still appears bullish. We just need to see the market sustainably break above $3,400.”
SPDR Fund
Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged yesterday for the second consecutive day, with the total standing at 964.22 metric tons, the highest level since September 12, 2022.
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