On Asian Session, gold prices declined slightly as investors awaited key U.S. economic data to assess the scale of the Federal Reserve’s anticipated interest rate cut this month.
By 01.55 GMT, spot gold had eased by 0.2% to $2,494.19 per ounce, after reaching a record high of $2,531.60 on August 20. U.S. gold futures also fell by 0.1% to $2,526.10 per ounce.
The U.S. dollar remained near a two-week high, making gold less attractive to holders of other currencies due to its inverse relationship with the dollar.
“Gold is struggling to regain its previous highs due to a lack of new positive catalysts. If upcoming U.S. data suggests economic weakness and the Fed signals a substantial rate cut, gold could see a resurgence,” noted Kelvin Wong, OANDA’s senior market analyst for Asia Pacific. He further added, “Prices could climb to as high as $2,640 this year, particularly if the Fed commits to a long-term rate cut strategy.”
Lower interest rates tend to enhance the appeal of gold, as they reduce the opportunity cost of holding non-yielding bullion.
Market attention is now focused on the U.S. August non-farm payrolls report due on Friday, with Reuters’ survey of economists predicting the addition of 165,000 jobs. Other key indicators on the horizon include the ISM surveys, JOLTS job openings, and the ADP employment report.
Currently, traders see a 31% probability of a 50-basis-point rate cut at the Federal Reserve’s September 17-18 policy meeting, and a 69% chance of a 25-basis-point cut. Recent data showing a rise in U.S. consumer spending in July has argued against a larger 50-basis-point cut.
Goldman Sachs has reaffirmed its position on gold as a hedge against geopolitical and financial risks, supported by anticipated Fed rate cuts and ongoing purchases by emerging market central banks. The bank reiterated its recommendation to maintain a long position in gold.
Meanwhile, spot silver edged down 0.2% to $28.44 per ounce, platinum fell by 0.8% to $922.27, and palladium dropped 0.5% to $974.29.
