Gold drops from 6-year as dollar rises for second consecutive session

Gold futures fell during the Asian session to drop in the second consecutive session from its highest since May 14, 2013 as the US dollar index rebounded from its lowest level since March 20, according to the inverse relationship between them, and on the threshold of developments and economic data release expected on Wednesday by the US economy.

As of 04:03 GMT, gold futures (August delivery) fell 1.26% to currently trade at $1,409.50 per ounce compared to the opening at $1,427.20, the gold futures opened today's trading session with a bullish price gap after it closed Yesterday's trading at $1,418.70, as the US dollar index rose 0.11% to 96.28 levels, showing its rebound from the three-month low at 96.18.

Investors are currently waiting for the US economy to release the Durable Goods Orders index reading, which account for about a half of consumer spending, and for more than two-thirds of US GDP, which could reflect stability at zero levels versus a 2.1% drop in April, While the core reading of the same index may show a 0.1% growth versus stability at zero levels in April.

This comes in conjunction with the release of the goods trade balance, which may show the deficit shrinking to $71.8 billion against $72.1 billion in April, with the reading of the Wholesale Inventories Index, which may indicate a slowdown in growth to 0.6% from 0.8%, as this comes hours after Federal Reserve Governor Jerome Powell's speech in New York, during which he limited the opportunities for interest rate cuts by the next meeting.

In his speech on economic and monetary policy at the Council on Foreign Relations, Powell said that many members of the Federal Open Market Committee are expecting expansionary measures, adding that the strength of the economic fundamentals supports the continued pace of growth and employment, as the economy continues to grow, while inflation is at the Fed's target.

Powell also noted that the Federal Commission expects inflationary growth to grow despite inflation stabilizing below 2%. He pointed out that the labor and agriculture sectors were concerned by the escalation of trade tensions. He added that the Committee's expectations remained positive despite the increasing uncertainty, While confirming that the Federal Reserve is closely monitoring developments in the domestic situation and is fully prepared to act appropriately.

On Wednesday, the Federal Open Market Committee dropped the word "patient" from its statement and added "we will act as necessary" to preserve the economy, which in turn opened the way for a possible cut in federal interest rates later. That eight members see a reduction this year. Whilst, the average market's forecast did not anticipate any reduction this year.

At a press conference held after the Federal Open Market Committee meeting in Washington, the Federal Reserve Governor, Jerome Powell said that some Fed monetary policymakers believe the issue of soft monetary policy has been strengthened, stressing that the commission will continue to monitor developments and economic data closely during the coming period to determine the future of monetary policy depending on those developments and data.

This came after the end of the FOMC meeting on June 18-19, during which Fed monetary policymakers kept short-term benchmark interest rates between 2.25% and 2.50% for the fourth meeting in a row, with the reveal of the Federal Commission's expectations of growth rates, inflation and unemployment as well as future interest rates for the next three years.

Otherwise, we followed on Tuesday, US President Donald Trump saying through his official account on Twitter that the statements issued by Iran and its government reflect their ignorance of the reality of the matter and the seriousness of what they did, stressing that if Tehran has done any attack by Iran on anything American will be met with great and overwhelming force, adding that more John Kerry & Obama.

The Iranian Foreign Ministry announced yesterday that the United States imposition of more economic sanctions on a number of officials and companies in Iran, including Iranian Foreign Minister Mohammad Javad Zarif, means that the door to negotiate with Washington will be closed because Tehran will not negotiate with the United States under any Pressure from the US administration, which recently withdrew from an the Western powers agreement with Iran.

On the other hand, the markets are looking forward to the launch of the G20 summit in Osaka, Japan, on next Friday and Saturday, as they look forward to the upcoming meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on Saturday, amid hopes to resolve the trade disputes between the world's largest two economies following the escalation of trade protectionism and the imposition of tariffs on each other's goods.