Gold prices fell in Europe on Friday, retreating from a five-week high as investors booked profits and the US dollar recovered against a basket of major currencies.
Traders refrained from building new long positions ahead of the US Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation gauge, which will provide fresh signals on the path of US interest rates for the remainder of the year.
Price Overview
• Gold prices today: Spot gold fell 0.3% to 3,406.61 dollars, down from the opening level of 3,416.71 dollars, after hitting an intraday high of 3,418.57 dollars.
• At Thursday’s settlement, gold rose 0.6% to log a third consecutive daily gain and touched a five-week peak at 3,423.32 dollars per ounce, supported by a weaker dollar and lower US yields.
Monthly Performance
For August, which officially concludes at today’s settlement, gold is up around 3.5% so far, on track for its biggest monthly gain since April. The advance has been driven by rising expectations of a Fed rate cut and concerns over the central bank’s independence amid pressure from President Donald Trump.
US Dollar
The dollar index rose 0.2% on Friday, heading for its first gain in four sessions, reflecting a rebound in the US currency against major and minor peers.
A stronger dollar typically makes gold, which is priced in dollars, less attractive to holders of other currencies.
US Interest Rates
• New York Fed President John Williams said the September meeting is “open” to a rate cut decision, adding that risks are more balanced and policymakers need to wait for upcoming data.
• Fed Governor Christopher Waller reiterated on Thursday his call for lower short-term borrowing costs, saying he would support a rate cut next month followed by further reductions over the next three to six months.
• According to CME’s FedWatch tool, markets are currently pricing in an 85% chance of a 25-basis-point cut in September, with 15% odds for no change.
• For October, rate cut probabilities stand at 93%, with only a 7% chance of unchanged policy.
• To recalibrate those expectations, investors are awaiting Friday’s July PCE report, which will be critical in shaping the Fed’s monetary policy outlook.
Outlook for Gold
• Tim Waterer, chief market analyst at KCM Trade, said gold remains a favored option for investors ahead of what is expected to be a more accommodative US policy stance starting next month.
• He added that if core PCE prints at 0.3% for the month, it would remain consistent with expectations for a Fed rate cut.
SPDR Holdings
SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased its holdings by 5.44 metric tons on Thursday, marking a fourth straight daily rise. Total holdings climbed to 967.94 metric tons, the highest since September 8, 2022.
