Gold prices begin the new week on a weaker note, moving away from Friday’s record high.
Gold price (XAUUSD) is on the defensive in the early European session on Monday, but it manages to stay above $2,500 and remains well within striking distance of the record top.
Fed rate cut bets, combined with global worries, continue to support the metal.
Growing acceptance that the Federal Reserve (Fed) will begin decreasing borrowing costs in September causes a new leg down in US Treasury bond yields. This in turn drags The US Dollar (USD) has reached its lowest level since January, acting as a tailwind for the non-yielding yellow metal.
Aside from that, the potential of additional escalation of geopolitical tensions in the Middle East, as well as the protracted Russia-Ukraine conflict, help to limit the downside for the safe-haven asset.
This week’s FOMC minutes and Fed Chair Powell’s speech expected to provide investors with further momentum.
Traders, on the other hand, appear hesitant to lay new wagers on the gold price, preferring to wait for more indications of the Fed’s rate-cutting course. As a result, the focus remains on the release of the FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium.
Daily Markrt Movers:gold price is waiting for additional information on the Fed’s rate-cutting route before continuing its upward trend.
The Fed expected to decrease interest rates, and there are mounting expectations. Geopolitical tensions in the Middle East pushed the gold price to a new record high on Friday, surpassing the psychological milestone of $2,500.
The US Producer Price Index and Consumer Price Index, released last week, showed that inflation is on the down, putting the Fed on track for a 25-basis-point rate drop in September.
This, to a greater extent, overshadowed Thursday’s positive US Retail Sales report, which alleviated concerns about a recession in the world’s largest economy and drew new buyers around the US Dollar.
Furthermore, the University of Michigan’s preliminary data revealed that the US Consumer Sentiment Index improved for the first time in four months, rising to 67.8 in August.
Another important aspect of the investigation indicated that Overall inflation forecasts remained unchanged at 2.9% over the next year and 3% over the next five years for the fifth consecutive month.
This, did little to excite USD bulls with expectations of an early start to the Fed’s policy easing cycle, which has been a significant factor driving flows towards the non-yielding yellow metal.
Fed President Austan Goolsbee, the US economy is not showing indications of overheating.
According to Chicago Fed President Austan Goolsbee, the US economy is not showing indications of overheating, therefore central bank authorities should be cautious about extending restrictive policies beyond what is necessary.
San Francisco Fed President Mary Daly downplayed concerns about a dramatic US economic slowdown, but said the US central bank should cut borrowing prices gradually.
Investors now Look for clues regarding future rate cuts in the FOMC minutes, which will be released on Wednesday, and Fed Chair Jerome Powell’s remarks at the Jackson Hole Symposium on Friday.
On the geopolitical front, Hamas issued an official statement on Sunday rejecting the terms of a hostage release-ceasefire agreement, which were discussed in Doha on Thursday and Friday.
Russia has threatened to retaliate for Ukraine’s sudden cross-border offensive into the Kursk area, the first time a foreign army has fought in the country since World War II.
