The world gold market experienced a slight decrease on Thursday (01/08) due to the increase in USD value. The precious metal had reached its highest level in 2 weeks at the beginning of the session, driven by expectations of a September interest rate cut and safe-haven demand, as the focus shifted to the US employment data to be released on 02/08.
At the close of trading on 01/08, spot gold contracts dropped by 0.4% to $2,438.32 per ounce, after reaching its highest level since 18/07/2024 at the start of the session.
Meanwhile, gold futures contracts rose by 0.3% to $2,480.8 per ounce.
The USD gained 0.3% after declining in the previous session, as central banks continued to stir up the currency market.
While the US Federal Reserve held interest rates steady at its policy meeting on Wednesday (07/31), Fed Chairman Jerome Powell hinted that interest rates could be cut immediately after September if the economy follows the expected trajectory.
Bart Melek, Head of Commodity Strategy at TD Securities, commented: “The market fully believes that interest rates will be cut in September, and there are market participants discussing the possibility of the Fed cutting 50 basis points.”
Gold, traditionally known as a hedge against economic and geopolitical risks, tends to thrive in a low-interest rate environment.
Investors are now waiting for the US employment report on 02/08 for further insights into the Fed’s policy trajectory.
Meanwhile, central bank buying and physical demand in Asia remain weak, so the gold market is not operating at full capacity.
The People’s Bank of China, the largest official gold buyer in the region in 2023, has restricted gold purchases for reserves for the second consecutive month in June.
An Tran (Source: CNBC)
