Quick Look:
- Gold rose by 0.3% to $2,303.80 per ounce, with US gold futures up 0.1% to $2,314.40 per ounce.
- Supported by a moderating US dollar, gold faces strong support around $2,300; expectations for Fed rate cuts impact sentiment.
- With a 62% probability of a rate cut in September, gold prices are caught between Fed policy and geopolitical tensions.
Gold prices experienced a modest increase on Thursday, with investors eagerly awaiting key US inflation data that could provide insights into the Federal Reserve’s future interest rate decisions. Spot gold rose by 0.3% to $2,303.80 per ounce as of 0816 GMT, recovering from its lowest level since June 10 reached on Wednesday. Meanwhile, US gold futures slightly increased by 0.1%, settling at $2,314.40 per ounce.
Market Dynamics and Influences
A moderating US dollar largely supports the current uptick in gold prices. Han Tan, chief market analyst at Exinity Group, highlighted that traders are mindful that price dips below $2,300 have been short-lived since April. This suggests a robust support level around this psychological threshold. However, Tan also cautioned that if expectations for Federal Reserve rate cuts by the end of 2024 diminish, gold bulls might struggle to keep bullion prices above $2,300.
Federal Reserve’s Influence and Market Sentiment
The probability of a rate cut by the Federal Reserve in September is currently about 62%, reflecting market uncertainty. Gold prices are navigating a complex landscape, caught between a Federal Reserve that is less dovish than previously anticipated and persistent geopolitical tensions. Analysts at BMI noted that gold remains in a “tug of war” influenced by these dual pressures.
Adding to the market’s anxiety are escalating geopolitical tensions, particularly in the Middle East. The ongoing cross-border strains between Israel and Lebanon’s Hezbollah have raised fears of a broader conflict that could potentially involve other regional powers. Such geopolitical risks typically bolster gold’s appeal as a safe-haven asset, providing additional price support.
Broader Precious Metals Market
In the broader precious metals market, spot platinum fell by 0.6% to $1,004.60 per ounce, and palladium dropped by 0.7% to $922.25 per ounce. In contrast, silver saw a marginal gain of 0.1%, reaching $28.79 per ounce. These movements reflect investor sentiment and market dynamics within the precious metals sector.
Gold’s modest rise on Thursday underscores the market’s sensitivity to upcoming US inflation data and the Federal Reserve’s potential policy moves. While the moderating US dollar provides support, the looming question of interest rate cuts still weighs heavily on investor sentiment. Additionally, geopolitical tensions, particularly in the Middle East, further complicate the outlook. Investors will closely watch economic and geopolitical developments in the coming days to gauge the future direction of gold prices.
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