Gold Prices Ease Near One-Month High
Gold prices dipped slightly on Monday, but remained close to a more than one-month high reached in the previous session. The softer U.S. data released recently has raised expectations of an interest rate cut by the Federal Reserve in September.
FUNDAMENTALS
Spot gold was down 0.2% at $2,386.58 per ounce, following a peak not seen since May 22 on Friday. U.S. gold futures also saw a slight decrease of 0.2% to $2,393.80.
Insight: The recent softening of U.S. economic data has increased speculation about the possibility of an interest rate cut by the Federal Reserve. This has boosted gold prices as lower interest rates reduce the opportunity cost of holding non-yielding assets like bullion.
Market Expectations and Central Bank Actions
Data released on Friday revealed that the unemployment rate had reached a 2-1/2-year high of 4.1%, indicating a weakening labor market. Market expectations now suggest a 78% chance of a rate cut by the U.S. central bank in September, according to CME’s Fedwatch Tool, with a growing likelihood of a second cut in December.
On the other hand, news that China’s central bank had refrained from adding gold to its reserves for the second consecutive month in June placed a cap on bullion prices. Additionally, physical gold dealers in India have been offering discounts due to high prices, as they anticipate a potential import duty reduction in the upcoming budget.
Sales Data and Price Movements
Perth Mint reported a decline in gold product sales, while silver sales dropped to their lowest level since June 2019, according to a statement released on Friday.
In terms of price movements, spot silver fell 0.2% to $31.15, platinum edged 0.3% lower to $1,024.00, and palladium slipped 0.8% to $1,017.78.
