Onome Amuge
Gold prices slipped on Tuesday, pulling back from a near two-week high as the dollar strengthened, though losses were tempered by growing expectations of an interest rate cut by the Federal Reserve.
Spot gold fell 0.5 per cent to $3,354.56 per ounce, retreating from its peak of $3,385.29 reached on Monday. US gold futures also dropped 0.5 per cent to $3,408.20. The dollar index’s 0.2 per cent rise from a one-week low made the precious metal less attractive to international buyers.
The shift in market sentiment follows weak US employment data released last Friday, which showed that job growth slowed more than expected in July. Revisions for May and June also saw a reduction of 258,000 jobs from previous reports.
The disappointing jobs data has significantly increased the likelihood of a Fed rate cut. The CME FedWatch tool now places the probability of a September rate reduction at nearly 88 per cent, up from 63 per cent just a week ago. Markets are now largely pricing in at least two quarter-point cuts this year.
“What gold needs to move higher from here is probably (another) weaker US economic data,” said Giovanni Staunovo, a commodity analyst at UBS. He also noted that traders are monitoring who President Donald Trump will appoint as the next Fed governor, a move that could potentially replace current chairman Jerome Powell and add to political uncertainty.
Trump’s recent actions, including the dismissal of the chief of labour statistics following the weak payrolls report, have further unsettled markets. His renewed threat to increase tariffs on Indian goods over the country’s continued purchase of Russian oil also contributes to a heightened sense of geopolitical risk. Gold, often seen as a safe haven asset, typically benefits from a low-interest-rate environment and political instability. However, analysts believe a stronger catalyst is needed for prices to break convincingly above the $3,450 level.
Elsewhere in the precious metals market, spot silver gained 0.2 per cent to $37.45 per ounce. Conversely, platinum fell 1.1 per cent to $1,314.50, and palladium shed 1.8 per cent to $1,184.94.
