Gold prices fell in the European market on Monday at the start of the week’s trading, retreating from Friday’s near two-week high, under pressure from profit-taking and a rebound in the US dollar against a basket of global currencies.
Following Fed Chair Jerome Powell’s comments at Jackson Hole, which boosted expectations of a US interest rate cut in September, investors this week await further evidence on potential monetary easing in the United States.
Price Overview
• Spot gold fell 0.35% to $3,359.85, down from the opening level of $3,371.92, after reaching an intraday high at the same level of $3,371.92.
• On Friday, gold settled 1.0% higher, hitting a near two-week high at $3,378.90 per ounce, after Powell’s cautious remarks supported rate-cut bets.
• For the week, gold gained around 1.1%, its third weekly advance in a month, amid increased demand for non-yielding assets.
US Dollar
The dollar index rose 0.25% on Monday, recovering from a three-week low of 97.56, reflecting a rebound in the US currency against a basket of global peers.
Beyond technical buying from lower levels, the dollar strengthened at the start of the week as markets awaited new evidence on the likelihood of a September Fed rate cut.
US Interest Rates
• Powell said at Jackson Hole on Friday that shifting risk balances may warrant policy adjustments, with current indicators showing rising downside risks for the labor market.
• Following those remarks, CME’s FedWatch tool showed September rate-cut odds rising to 87% from 75%, while odds of no change fell to 13% from 25%.
• October rate-cut odds climbed to 94% from 85%, while the probability of no change dropped to 6% from 15%.
• Investors will track a series of key US data releases this week, including Friday’s Personal Consumption Expenditures (PCE) report, alongside fresh Fed commentary.
Gold Outlook
• Matt Simpson, senior market analyst at City Index, said gold is well supported near $3,350 in the short term, after Powell’s cautious stance lifted prices on Friday.
• He added that sustained upside likely requires softer PCE inflation and weaker jobs data ahead. However, with inflation risks still elevated, gold’s gains may remain capped after an initial corrective bounce.
SPDR Gold Trust
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged on Friday, keeping the total at 956.77 metric tons — the lowest level since August 6.
