Gold hovers near record highs before US data

Gold prices rose in the European market on Thursday, resuming gains after pausing yesterday, and moving closer to all-time highs. The advance came as the US dollar halted its climb against a basket of major currencies.

With Federal Reserve officials adopting a more cautious tone, the likelihood of two US interest rate cuts before the end of this year has diminished. To reprice those expectations, investors await key US economic data later today.

Price Overview

• Gold prices rose by about 0.7% to $3,761.66, from the opening level of $3,736.06, after hitting a low of $3,729.62.

• On Wednesday, gold settled down by 0.75%, marking the first loss in four sessions, as profit-taking pulled it back from an all-time high of $3,791.13 an ounce.

US Dollar

The dollar index fell by 0.1% on Thursday, retreating from a two-week high of 97.92 points, reflecting the pause in the US currency’s advance against major counterparts.

Beyond profit-taking, the US dollar weakened as investors avoided building additional long positions, preferring to wait for further clues on the Fed’s interest rate path.

US Interest Rates

• Fed Chair Jerome Powell said on Tuesday that the central bank will continue to balance concerns about a weakening labor market with mounting worries about inflation.

• According to the CME FedWatch tool, the probability of a 25-basis-point rate cut at the October meeting is currently priced at 92%, while the chance of leaving rates unchanged stands at 8%.

• Investors are awaiting key US data later today, including second-quarter GDP and weekly jobless claims, to reassess these expectations.

Outlook for Gold

Brian Lan, managing director of Singapore-based GoldSilver Central, said: “I don’t think inflation data will have much of an impact on gold unless it’s exceptionally high.” He added: “From our quantitative market view, the long-term outlook remains very positive.”

SPDR Fund

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 3.72 metric tons on Wednesday, bringing the total to 996.85 metric tons, down from 1,000.57 metric tons — the highest level since August 3, 2022.