Gold prices edged higher despite the dollar’s continued weakness, while investors braced themselves for US economic data that could provide insight into the timing of the Federal Reserve’s interest rate cut.
The gold was up 0.2%, trading at USD 2,401.22 per ounce. American gold futures increased by 0.4% to USD 2,403 points. Holders of other currencies could afford bullion priced in greenbacks because of the weak dollar.
The GDP report for the second quarter is expected to be released soon, while the June personal consumption expenditures (PCE) data is anticipated to be released in the coming weeks.
“Gold looks quite comfortable around $2,400 for now, so there is the chance of a minor bounce heading into GDP. But, should growth surprise to the upside, I still think gold can hold above USD 2,360 in the current environment,” City Index senior analyst Matt Simpson said, as reported by the Zawya.
Recently, gold prices reached an all-time high of USD 2,483 points. The markets are generally pricing in a 25 basis point reduction in the United States’ interest rates by September 2024. The opportunity cost of holding bullion is decreased by lower rates.
Regarding politics, United States Vice President Kamala Harris is garnering Democratic support for her unexpected bid for the presidency following President Joe Biden’s withdrawal.
In accepting the Republican nomination, Republican Donald Trump committed to lowering interest rates and corporate taxes. Reduced tax receipts could lead to a wider US deficit in the federal government’s budget. Many investors think that even with a second Democratic administration, the deficit will continue to worsen.
“While there is a lack of a clear pre-election commodities trade given the range of scenarios that could play out, gold stands out as a winner. Structurally bullish drivers for gold, like growing concerns on complacency over the rise in fiscal debt, tariffs, and trade retaliations as well as broad America First rhetoric, are likely to remain intact,” JP Morgan said in a note.