Gold prices were updated in the last moments of the trading session, rising after falling in the morning. Bulls took advantage of the yellow metal’s falling price and increased their purchases, pushing the price back above $2,400 per ounce. Gold futures are currently seeing a 0.5% increase, reaching $2,407 per ounce. At the same time, spot gold contracts rose by about 0.4%, reaching $2,406 per ounce.
Global gold prices deepened at these moments in the trading session, today, Tuesday, despite the stability of the dollar. Investors are awaiting US economic data this week to gain more clarity on the interest rate cut schedule by the US Federal Reserve. Dollar strength may remain near the 104-point level, putting pressure on the price of dollar-denominated gold for holders of other currencies.
Traders are anticipating the release of the second quarter GDP report on Thursday, as well as June personal consumption expenditures data on Friday. Regarding gold, Matt Simpson, chief analyst at City Index, said: “Gold appears to be currently stable around $2,400, and therefore there is a chance for a slight rebound with the announcement of GDP data.” He added: “However, in the event of a positive surprise “In growth, I still have a belief that gold may sustain a price above $2,360 in the current economic conditions.”
Gold and Interest: Gold prices rose to an all-time high of $2,483.60 last week, with markets generally pricing in a 25-basis point cut in US interest rates by September. As lower interest rates reduce the opportunity cost of owning bullion. He added: “Expectations regarding the interest rate are the factor that most influences the price of gold currently. However, political uncertainty may prevail in the event of fundamental developments.”
Follow the US interest available
The US interest rate tracking tool available on the Investing Saudi website showed investors’ preference to stabilize borrowing costs during the July meeting at 97.4%, with a slight decline in expectations of the Fed reducing interest rates by 25 basis points during the September meeting to 91.7% from 94% in the previous session. On the political front, US Vice President Kamala Harris is working to build Democratic support for her presidential candidacy after President Joe Biden withdrew from the race. On the other hand, while accepting the Republican nomination, Donald Trump pledged to lower corporate taxes and interest rates. Declining tax revenues could lead to a widening of the US federal government’s budget deficit. While many investors believe that the deficit will continue to deteriorate under a second Democratic administration as well.
A decline in gold futures prices was recorded during last Monday’s trading, as the yellow metal was affected by profit-taking pressure after a series of gains that continued for 3 consecutive weeks ended. Upon settlement, gold futures prices fell 0.2%, or $4.40, to $2,394.70 per ounce for August delivery. Thus, the yellow metal continues to record losses since reaching a record level of $2,467.8 in the July 16 session.
Goldman Sachs said it remains optimistic about gold in a note issued last Monday, citing both potential federal interest rate cuts and steady Chinese demand as key drivers, which have helped push gold prices to record levels. This positive outlook comes despite rising US interest rates, which usually tend to drag down gold prices. While the Chinese market is sensitive to price fluctuations, the brokerage sees structural changes creating an “unwavering bull market” for gold in China. Low interest rates and growing economic uncertainty are boosting demand, even as higher prices cool jewelry purchases.
The Chinese central bank has been buying gold in recent months
In addition, China’s central bank has been on a gold buying spree in recent months, stockpiling hundreds of tons. Analysts say these large purchases are driven by concerns about US financial sanctions and the sustainability of US sovereign debt. It underscores importance of central bank gold purchases, which have seen a three-fold increase since mid-2022. They added: “We continue to see very significant value in gold longs and maintain our bullish forecast of $2,700 (up 12% from current spot prices).” For the year 2025.” This, coupled with expected return of Western capital into the gold market due to potential Fed rate cuts, paints a very optimistic long-term picture for gold. While the Chinese market may see short-term adjustments in demand due to price sensitivity, the overall outlook remains positive.
Traders expect interest rates to be cut twice by a quarter of a percentage point each time during remainder of 2024 with inflation declining in the United States. The market also expected by 60% yesterday, Monday, to cut interest rates three times, after the global investment bank, Goldman Sachs, said. He sees a strong rationale for cutting interest rates no sooner than July. After trading in a relatively tight range throughout June, price of gold rose this month as markets braced for the Federal Reserve move toward a more accommodative monetary policy, a shift that should help appeal to non-interest-bearing assets.
Yesterday, Monday, Federal Reserve Chairman Jerome Powell confirmed that recent data provided more confidence that inflation is falling to the target rate. Gold prices have also benefited since the beginning of 2024 from the coordinated purchases carried out by central banks. e gold price is likely to consolidate near its previous record high, but a break above that would require a significant shift in expectations for Fed rate cuts.
