Gold prices declined in European markets on Thursday, extending losses for the second consecutive day and moving away from a five-week high. The drop came as part of ongoing correction and profit-taking activity, alongside weakening safe-haven demand amid easing global trade tensions.
Meanwhile, the US dollar began to rebound in the foreign exchange market ahead of key economic data releases from the United States, which are expected to provide further evidence on the likelihood of an interest rate cut in September.
The Price
Gold fell by 0.65% to $3,365.98 per ounce, down from the opening level of $3,387.51. The session high reached $3,393.48.
On Wednesday, gold closed down by 1.3% — its first loss in the past four sessions — due to correction and profit-taking after earlier hitting a five-week high of $3,438.94 per ounce.
Trade Developments
Following the major trade agreement between the United States and Japan, some European Commission officials confirmed that the EU and the US are close to reaching a similar deal. This would impose a 15% tariff on European imports, while exempting certain goods from US duties.
US Treasury Secretary Scott Besant stated that American and Chinese officials will meet in Stockholm next week to discuss extending the trade negotiation deadline to August 12.
US Dollar
The US Dollar Index rose by approximately 0.15% on Thursday, beginning a recovery from its two-week low of 97.10, reflecting continued rebound in the dollar against a basket of global currencies.
This rebound comes amid reports that President Donald Trump will visit the Federal Reserve later today. It remains unclear whether Trump — who has repeatedly criticized Jerome Powell for not cutting US interest rates more aggressively — will meet with the Fed Chair.
US Interest Rates
According to the CME FedWatch Tool: The probability of a 25-basis-point rate cut in the July meeting remains steady at 3%, while the probability of holding rates unchanged is at 97%.
The probability of a 25-basis-point rate cut in the September meeting is currently priced at 64%, versus a 36% chance of no change.
Investors are awaiting key US data due later today, including weekly jobless claims and performance metrics for key sectors of the US economy during July, in order to reassess rate expectations.
Gold Outlook
Bryan Lan, Managing Director at Singapore-based GoldSilver Central, stated: “We saw yesterday that gold prices appeared poised for another upward wave until trade-related news triggered some profit-taking.”
He added, “We also saw a notable decline in the dollar, which of course supports gold. So I think this is just a minor pullback for now — in fact, we remain very bullish on gold.”
SPDR Fund
Holdings of the SPDR Gold Trust, the world’s largest gold-backed ETF, remained unchanged yesterday, keeping the total at 954.80 metric tons — the highest level since June 27.
