Gold Dips Slightly, but Holds Near One-Month Highs Amid Rate Cut Anticipation

Gold prices experienced a minor retreat in Asian trading on Monday, as investors paused to assess the upcoming testimony by Federal Reserve Chair Jerome Powell and key inflation data due later in the week. Despite the slight dip, gold remains close to one-month highs, fueled by growing expectations of an interest rate cut by the Federal Reserve in September.

Last week’s robust gains in gold prices were propelled by a series of weak U.S. labor market reports, igniting optimism for an impending rate cut. The precious metal, which typically benefits from lower interest rates, broke out of its recent range, surging above the $2,300 mark.

Traders are increasingly confident in the prospect of a 25 basis point rate cut by the Federal Reserve in September, with the probability now exceeding 72%, according to the CME Fedwatch tool. This marks a significant jump from last week’s 59% forecast.

Attention now shifts to Federal Reserve Chair Jerome Powell’s two-day testimony before the Senate and the House, where investors will be keen to glean insights into the central bank’s thinking on interest rates. Additionally, the upcoming release of consumer price index inflation data will provide crucial information for shaping the Fed’s monetary policy outlook.

While other precious metals like platinum and silver also experienced slight declines on Monday, they maintained their strong gains from the previous week, reflecting the ongoing anticipation of a rate cut.

Overall, the gold market appears poised for further movement as investors digest the upcoming economic data and Powell’s testimony. The prevailing sentiment remains cautiously optimistic, with the possibility of a September rate cut continuing to buoy gold prices near their one-month highs.