Gold prices rose in the European market on Wednesday, extending gains for the second consecutive day, supported by the broad decline of the US dollar against a basket of global currencies.
Moderate inflation data from the United States increased the likelihood of the Federal Reserve cutting interest rates in September, with markets awaiting further economic data on Thursday and Friday.
Price Overview
•Gold prices today: Gold rose by about 0.5% to $3,363.53, from the opening level of $3,348.26, after recording a low of $3,342.79.
•On Tuesday, gold settled with a gain of 0.2%, after earlier hitting a one-week low of $3,331.14 an ounce.
US Dollar
The US Dollar Index fell by 0.35% on Wednesday, deepening losses for the second session in a row, reaching a two-week low of 97.71 points, reflecting continued weakness in the US currency against a basket of global currencies.
As we know, the decline in the US currency makes dollar-priced bullion more attractive to buyers holding other currencies.
US Interest Rates
•Tuesday’s US data showed consumer prices rose moderately in July, with headline inflation unchanged against market expectations, while core inflation saw a slight increase.
•Karl Schamotta, chief market strategist at Corpay, said: Core inflation remains weak, giving policymakers room to maneuver in responding to signs of impending weakness in the labor market.
•Following the data, and according to the CME Group’s FedWatch Tool: the probability of a 25 basis-point rate cut in September rose from 88% to 94%, while the probability of rates staying unchanged fell from 12% to 6%.
•The probability of a 25 basis-point cut in October rose from 94% to 98%, while the probability of no change fell from 6% to 2%.
•To reprice these expectations, investors are awaiting important US data on Thursday and Friday, including producer prices, jobless claims, and monthly retail sales.
Gold Outlook
•Tim Waterer, chief market analyst at KCM Trade, said: The weaker US dollar has contributed to a moderate recovery in gold, with the precious metal fluctuating around $3,350 ahead of the Trump–Putin meeting on Friday.
•Waterer added: If the Alaska meeting produces no resolution and the war in Ukraine continues, gold could head back toward the $3,400 level.
SPDR Holdings
Gold holdings at SPDR Gold Trust, the largest global gold-backed ETF, remained unchanged on Tuesday, keeping the total at 964.22 metric tonnes — the highest level since September 12, 2022.
