On Monday, gold prices slid as traders waited for more signals from Federal Reserve (Fed) chair Jerome Powell on looming US interest rates and the inflation report.
In the Asian afternoon session, the yellow metal for August delivery fell by -0.70% to $2,380.85 per troy ounce, while spot gold dipped by -0.79% to $2,372.82 per ounce.
However, despite the recent decline, the bullion prices were inching close to one-month highs and were also on the edge of breaking above $2,400 an ounce. This comes amid growing bets that the Fed will reduce interest rates in September.
Furthermore, the dollar’s decline has been a boon for gold prices, with the dollar hitting a near one-month low.
Meanwhile, bullion sharply surged last week, loosening to the low-$2,300s on sluggish labor market readings, which drove optimism over rate cuts. Last Friday’s weak nonfarm payrolls data also contributed to the yellow metal’s gains.
Furthermore, traders closely monitor the US economy and monetary policy for more cues. Fed Chair Powell is set to present a two-day testimony before the Senate and the House, likely to sort out the regulator’s plans for interest rates.
The consumer price index (CPI) report, due this week, is crucial as it could influence the Fed’s rate decision, potentially impacting gold prices.
US Fed Rate-Cut Bets Spark Optimism for Gold
Gold prices are anticipated to increase amid rising bets that the US Fed might reduce interest rates in the third quarter, which could spark support for bullion.
Moreover, France’s political uncertainty due to exit polls indicates a hung parliament, which may push investors toward safe-haven assets like the yellow metal.
Meanwhile, analysts noted that gold remains elevated amid unpredictable market conditions as the People’s Bank of China (PBoC) awaits further slides before resuming to purchase bullion.
According to data, PBoC’s bullion holding was maintained at 72.8 million troy ounces at the end of June. In May, China’s central bank decided to halt its 18-month spree of adding to reserves.
