Gold Prices Drop Due to Market Adjustment
Gold prices dropped by more than 1% on Thursday, hitting their lowest point in two weeks as investors shifted their focus to upcoming U.S. economic data. This adjustment was made in anticipation of potential clues on when the Federal Reserve might cut interest rates.
By 1302 GMT, spot gold had fallen by 1.2% to $2,369.29 per ounce, marking its lowest level since July 10. Additionally, U.S. gold futures saw a 1.9% decline to $2,368.80.
Pressure on Gold Prices and Market Sentiment
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, highlighted the pressure on gold prices, attributing it to ongoing profit booking influenced by the anticipated rate cut in September. Trivedi also noted the possibility of a one-time rate cut before a pause, especially with the upcoming U.S. elections in November 2024. The market is now waiting for cues from the Fed’s policy review on July 31.
Factors Weighing on Gold Prices
The decline in global tech stocks led to a multi-trillion-dollar drop in stock markets on Thursday, affecting investor sentiment across various asset classes, including gold.
Investors are closely monitoring the upcoming personal consumption expenditure (PCE) data on Friday to adjust their expectations for Fed rate cuts. The CME FedWatch Tool suggests a 100% probability of a rate cut in September. In a low-interest-rate environment, assets like gold, which do not yield interest, tend to be more appealing.
Market Outlook and Technical Levels
Pranav Mer, VP – Research (Commodity & Currency) at BlinkX and JM Financial, mentioned that chart-based selling was observed in bullion as key supports in gold were breached. The next support levels in gold are around $2,349, while silver could see support around $29.5.
In addition to gold, other precious metals also experienced declines. Spot silver fell by 4.8% to $27.6 per ounce, hitting an 11-week low. Platinum dropped by 1.5% to $933.68, near a three-month low, and palladium decreased by 2.9% to $905.32.
These price movements indicate a cautious market sentiment as investors navigate through economic data releases and central bank policy decisions in the coming weeks.
