Gold prices edged lower on Monday after soaring to a record high of $2,509.65 in the previous trading session. The dip came as investors opted to secure profits from the recent surge while positioning themselves for key signals from the Federal Reserve and keeping a close watch on geopolitical developments in the Middle East.
Spot gold declined by 0.2% to $2,503.50 per ounce as of 11:57 am ET (1557 GMT), slightly below its record peak from Friday. Meanwhile, U.S. gold futures saw a modest increase of 0.2%, climbing to $2,542.10 per ounce.
Market participants are cautious as they await clarity on the Federal Reserve’s next move, especially regarding interest rate cuts. David Meger, director of alternative investments and trading at High Ridge Futures, shared his perspective on the current market dynamics: “We expect some consolidation or pull-back in the gold market, especially if the Fed only indicates a 0.25 bp rate cut and doesn’t hint at a larger 0.50 bp cut, which may disappoint traders.”
Currently, the CME FedWatch Tool suggests a 77.5% probability that the Federal Reserve will opt for a 25-basis-point rate cut in September.
This anticipation has heightened the focus on the minutes from the Fed’s last policy meeting, set to be released on Wednesday, and Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole economic symposium on Friday.
According to Reuters technical analyst Wang Tao, gold might retreat to the $2,479-$2,487 range if it fails to overcome the resistance level at $2,507. However, Giovanni Staunovo, an analyst at UBS, expressed a more bullish outlook, predicting that gold could rise further, potentially reaching $2,600 per ounce by the year’s end. Staunovo noted that much depends on whether Powell hints at a more substantial rate cut.
On the physical side, several Chinese banks have received new gold import quotas from the central bank, anticipating sustained demand even as prices remain near record levels. Achilleas Georgolopoulos, an investment analyst at forex broker XM, highlighted the strong demand driven by geopolitical tensions, particularly the ongoing Israel-Iran-Hamas conflict. “Gold demand is strong as geopolitical tensions, particularly from the Israel-Iran-Hamas conflict, drives safe-haven buying,” Georgolopoulos stated in a note.
Beyond gold, other precious metals experienced mixed movements. Silver rose by 1.1% to $29.33 per ounce, platinum inched up 0.3% to $957.43, while palladium saw a significant drop of 2.2%, settling at $930.33.
As the global markets remain on edge, the interplay between the Federal Reserve’s policy decisions and geopolitical events will likely continue to influence gold prices and investor sentiment in the coming weeks.
