Gold prices rose in the European market on Thursday, extending gains for a third straight session and trading above the 3,400-dollar mark per ounce for the first time in two weeks, supported by continued weakness in the US dollar against a basket of global currencies.
Less aggressive comments from some Federal Reserve officials have boosted expectations of a US rate cut in September. To reprice those odds, investors later today await key US economic data.
Price Overview
Gold prices rose 0.15% to 3,401.52 dollars, the highest since August 11, from the opening level of 3,397.17 dollars, after touching a low of 3,384.65 dollars.
On Wednesday, gold settled 0.15% higher, its second consecutive daily gain.
US Dollar
The dollar index fell about 0.15% on Thursday, extending losses for a third session, reflecting continued weakness in the greenback against a basket of major and minor currencies.
The decline came as the US 10-year Treasury yield dropped to a two-week low, with traders increasing bets on a Fed rate cut next month.
US Interest Rates
Federal Reserve member John Williams said the September meeting would be “open” to a rate cut decision. He added: “The risks are more balanced—we just have to wait and see how the data evolves.”
According to CME’s FedWatch tool, market pricing currently assigns an 87% probability of a 25-basis-point rate cut in September, with 13% odds of no change. For October, markets see a 94% chance of a quarter-point cut and only 6% odds of no change.
To reprice those expectations, investors later today await key US data, including second-quarter GDP and weekly jobless claims.
Outlook for Gold
Kyle Rodda, market analyst at Capital.com, said: “There is strong interest in gold due to these institutional trust issues and risks surrounding Fed independence.”
He added: “But we are waiting for a stronger driver to push prices firmly beyond the critical 3,400-dollar level. The US PCE inflation data will be extremely important. We remain optimistic on gold, and I believe all the fundamentals are moving in the right direction.”
SPDR Gold Trust
Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 2.58 metric tons on Wednesday, marking a third consecutive daily increase, bringing total holdings to 962.50 metric tons, the highest since August 15.
