Gold prices eased today as investors adopted a cautious stance, awaiting fresh cues on the Federal Reserve’s imminent interest rate cut. A slight recovery in the dollar is adding pressure on gold prices.
Traders are currently pricing in a 63.5% probability of a 25 basis point cut and a 36.5% chance of a more substantial 50 basis point reduction in the anticipated September rate cut.
This follows dovish statements from Fed officials, who have highlighted rising risks to the labor market while expressing confidence that inflation will return to target.
Markets are looking forward to a slew of economic data this week, including the second estimate of the US Gross Domestic Product (GDP) Annualized for the second quarter (Q2) and Personal Consumption Expenditures (PCE) Price Index data, which will be published on Thursday and Friday.
Gold may experience more volatility during this week as investors digest the data. Although the general macroeconomic outlook is supportive for gold prices.
Geopolitical developments in the Middle East might also continue to support gold, as further escalations in the region could increase demand for safe-haven assets such as gold. Overall, while the macroeconomic and geopolitical factors are supportive for gold to continue its momentum, investors are waiting for further confirmation.
