Key points:
Gold prices have taken a step back from their record highs as traders closely monitor developments around the U.S. Federal Reserve’s rate decisions and upcoming economic data. On Thursday, spot gold slipped by 0.5% to $2,500.65 per ounce, down from a peak of $2,531.60 reached earlier this week. Similarly, U.S. gold futures edged down by 0.4% to $2,537.10 per ounce.
This decline in gold prices comes at a time when the market is highly sensitive to signals from the Federal Reserve. The minutes from the Fed’s July meeting suggest that officials are inclined towards a rate cut at the September meeting.
See: Gold prices decline as seen on the VT Markets app.
Looking at the current charts, the XAU/USD (gold) chart shows a slight downtrend, with the price currently around 2502.97, after peaking at 2531.67. This movement comes as traders increasingly speculate on a potential 25 basis point rate cut by the Federal Reserve, with market participants pricing in a 62% chance of this scenario.
The expectation of lower interest rates typically makes non-yielding assets like gold more attractive, as the opportunity cost of holding bullion decreases.
The chart reflects this mixed sentiment, with the price hovering near key Moving Averages (5, 10, 30). The MACD indicator shows a lack of strong momentum, with the MACD line close to the signal line, indicating uncertainty in the market.
While there has been some bullish activity pushing prices upward, the overall trend appears cautious as traders await more definitive signals regarding U.S. monetary policy.
Given the current outlook, gold could find support if the Federal Reserve moves towards rate cuts, potentially driving prices higher as investors seek the safety of non-yielding assets. Key levels to watch include the 2500 psychological support and the 2531.67 recent high, which could act as resistance.
The dollar index, which measures the greenback against a basket of major currencies, was up by 0.2% after hitting its lowest level since December in the previous session. This slight recovery in the dollar put additional pressure on gold, which tends to move inversely to the dollar.
Investors are now focused on the Jackson Hole Economic Symposium, which begins on Thursday, where Federal Reserve Chair Jerome Powell is expected to provide further clarity on the Fed’s monetary policy outlook.
Additionally, the market is awaiting the U.S. weekly jobless claims data, due at 1230 GMT, which could influence the market’s next move. If the data shows further softening, especially following recent downward revisions to payroll figures, gold could regain some of its lost ground.
In the broader metals market, spot silver fell by 0.9% to $29.37 per ounce, platinum dropped 0.41% to $959.76, and palladium slipped 0.3% to $948.55 per ounce. The SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, also saw its holdings fall for the second straight session on Wednesday, reflecting cautious sentiment among investors.
The cautious tone in the gold market suggests that traders are in a wait-and-see mode, balancing between the potential for further rate cuts and the impact of upcoming economic data. If the Fed moves forward with the anticipated rate cut in September, gold could see renewed buying interest, particularly if the dollar weakens further.
However, if economic data comes in stronger than expected, this could dampen expectations for aggressive easing, leading to further consolidation in gold prices. Traders should keep an eye on the Jackson Hole Symposium and jobless claims data for the next cues.
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