Gold drops off 6-year highs as dollar rebounds

Gold futures fell during the Asian session to bounce for the third consecutive session off its highest since May 14, 2013 as the US dollar index rose for a second session in three of its lowest since March 20 according to the inverse relationship between them, and on the threshold of developments and economic data release expected Thursday by the US economy.

As of 03:40 GMT, gold futures (August delivery) fell 0.13% to currently trade at $1,410.80 per ounce compared with the opening of  $1,412.70. the futures started today trading on a bearish price gap after closing Yesterday's trading session at $1,415.40, while the dollar index rose 0.13% to 96.30, resuming its rebound from a 3-month low from the opening of 96.17.

Investors are currently waiting for the US economy to release its reading for the GDP which may reflect the stability of the world's largest economy at 3.1%, unchanged from the previous first quarter reading and 2.8% in last year's fourth quarter. while the reading for the same index measured by prices may stabilize at 0.8%, unchanged from previous reading and while the fourth quarter's reading was at 1.7%.

This comes in conjunction with the June 2nd Jobless Claims reading, which could reflect a rise of 4K to 220K versus 216K in the previous week's reading, to the release of housing market data with the release of Home Sales Which may show a 1.1% rise versus a 1.5% drop in April.

On the other hand, we followed yesterday US Treasury Secretary Steven Mnuchin expressing that 90% of the trade agreement with China had been completed amid hopes of reaching a trade agreement with China as soon as possible, while adding that the date for the trade agreement with China can not be determined, hours before the expected meeting between the US president Donald Trump and his Chinese counterpart Xi Jinping on Saturday at the G20 summit in Osaka, Japan, which begins on Friday.

Other than that, we followed last Tuesday. Fed Governor Jerome Powell saying that the broader market expectations of a federal interest rate cut at the next FOMC meeting will not be necessarily achieved, limiting opportunities for short-term interest rate cuts by the Federal Reserve at the next meeting in July.

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.