Gold prices rebounded in Tuesday’s early European session.
During the early European session on Tuesday, the gold price (XAUUSD) rose in response to a lower US dollar (USD). The downside for the precious metal may be limited as traders increase their wagers that the US Federal Reserve (Fed) will lower interest rates in September following weak US job statistics last week. Furthermore, the cautious atmosphere resulting from political uncertainty in France and geopolitical tensions in the Middle East may enhance the price of gold, a classic safe-haven asset.
Pausing China’s PBoC XAU purchases will most certainly have an impact on XAUUSD in the near future.
Nonetheless, gold prices The People’s Bank of China’s (PBoC) decision not to acquire gold for the second consecutive month in June may pull prices lower. Gold traders will be watching Fed Chair Jerome Powell’s semi-annual congressional hearing, as well as comments by Fed officials Michael Barr and Michelle Bowman. On Thursday, the US Consumer Price Index (CPI) inflation statistics will take the spotlight.
Daily Market Movers: Gold price remains robust despite mounting Fed rate drop predictions.
According to official data issued on Sunday, the Chinese central bank held off on XAU purchases for the second consecutive month in June.
China, the world’s top gold consumer, held its gold reserves steady for the second month in a row in June, following an 18-month period of purchases. These results showed that its reserves remained. 72.8 million ounces valued at approximately $170 billion.
“This appears to be a lot of profit taking, and equities are strong, especially this morning, which has a little bit of a competing factor with precious metals,” said Bob Haberkorn, senior market strategist at RJO Futures.
According to the CME FedWatch tool, financial markets now expect the Fed to decrease interest rates in September by roughly 76%, up from 71% last Friday.
The US CPI inflation rate predicted to fall to 3.1% YoY in June from 3.3% in May, while core inflation expected to remain stable at 3.4% YoY in the same reported period.
