Gold Prices Slip Slightly Amid Easing Recession Fears and Rate Cut Bets

Gold prices experienced a minor decline in Asian trade on Friday, as reduced recession concerns tempered the demand for safe-haven assets. Despite this, expectations of interest rate cuts kept gold prices close to record highs.

Spot gold fell by 0.1% to $2,453.02 an ounce, while gold futures for December delivery also dipped 0.1% to $2,490.15 an ounce by 01:08 ET (05:08 GMT). Despite the slight drop, gold was on track for a modest weekly gain of 0.9%, with spot prices trading approximately $30 below their all-time high.

Earlier in the week, soft inflation data strengthened the belief that the Federal Reserve may reduce interest rates in September. However, a slight monthly increase in consumer inflation led traders to lean towards a smaller rate cut of 25 basis points, rather than 50 basis points.

Stronger-than-expected U.S. retail sales data also bolstered confidence in the economy, reducing expectations for a more significant rate cut. Nevertheless, the prospect of lower interest rates remains positive for gold, as it reduces the opportunity cost of holding non-yielding assets like gold.

Additionally, ongoing geopolitical tensions in the Middle East, particularly concerns about potential conflict between Iran and Israel, continued to support some demand for gold as a safe haven. Analysts at Alpine Macro suggested buying gold amid the possibility of escalating tensions in the region, particularly with Iran potentially retaliating against Israel for the assassination of a Hamas leader in Tehran.