Gold Loses Shine As Investors Eye US Data

Gold prices tumbled on Thursday, dropping over 1.67% to reach their lowest point in two weeks. This decline comes as investors shift their focus from safe-haven assets to upcoming US economic data, particularly the Personal Consumption Expenditure (PCE) data due on Friday. The precious metal is trading at $ 2,357.5 per ounce at the time of writing.

Profit Taking, Rate Cut Expectations

Gold’s price drop is attributed to a combination of factors. Investors are taking profits after a recent rally, with the anticipated September rate cut by the Federal Reserve already being priced into the market. However, some analysts believe this might be a one-time cut before a pause, especially with the US elections approaching in November.

Focus on US Economic Data

The upcoming PCE data is crucial for gauging the Fed’s monetary policy stance. A strong reading could indicate a delay in rate cuts, further dampening gold’s appeal. Investors are closely watching this data to adjust their expectations for the timing of these cuts.

Broader Market Sell-off

The drop in gold coincides with a sell-off in the broader market on Thursday, with global tech firms leading the dip. The price of the precious metal was further pressured by this risk-off attitude.

Yen Strengthens, Dulling Gold’s Safe-Haven Appeal

The worldwide market trepidation did not significantly increase demand for gold as a safe haven. This is perhaps because the Japanese yen, a well-known safe-haven currency, has been gaining. The yen’s increase was spurred by recent rumors that the Bank of Japan might raise interest rates next week.

Impact on Other Precious Metals

Gold was not the only commodity to drop. The decline in silver prices was more severe, falling more than 4.8% to an 11-week low. Palladium and platinum saw declines as well, by 2.9% and 1.5%, respectively.

Looking Ahead

The price of gold will pivot in the next days. Investors will be eagerly monitoring the publication of US economic data, especially the PCE. While a low reading would provide some support, a large reading might cause additional drops in gold prices.

China’s net gold imports via Hong Kong slumped 18% in June from the previous month, Hong Kong Census and Statistics Department data showed on Thursday, as the recent surge in gold prices weighed on jewelry demand.