Are you keeping an eye on the gold market? Well, buckle up because gold dropped more than 1% on Thursday, hitting its lowest point in two weeks. Investors are shifting their focus to upcoming U.S. economic data that could shed light on when the Federal Reserve might cut interest rates.
As of 13:02 GMT, spot gold had fallen by 1.2% to $2,369.29 per ounce, marking its lowest level since July 10. Meanwhile, U.S. gold futures dipped by 1.9% to $2,368.80.
According to Jateen Trivedi, VP Research Analyst at LKP Securities, “Gold prices took a hit due to pressure from Comex, with Comex Gold dropping below $2,375 from $2,409. This caused MCX Gold to see a sharp correction of ₹1,100, settling at ₹67,850. The pressure is mainly due to profit booking since the expected September rate cut had already been factored in. However, there’s a possibility of a one-time cut before a pause, especially with the upcoming U.S. elections in November 2024. Keep an eye out for cues from the Fed’s policy review on July 31.”
What’s causing gold prices to drop?
Global tech stocks experienced a significant decline, leading to a multi-trillion-dollar drop in stock markets on Thursday.
Investors are eagerly awaiting the personal consumption expenditure (PCE) data on Friday to adjust their expectations regarding Fed rate cuts. The CME FedWatch Tool indicates a 100% chance of a rate cut in September. In a low-interest-rate environment, bullion, which doesn’t yield interest, tends to be more attractive.
“Gold and silver prices are trading lower as global financial markets experience broad selling. This is driven by the sharp appreciation of the Japanese yen, leading to speculation of a rate hike by the Bank of Japan at its upcoming meeting next week. While other central banks are considering rate cuts, prices are currently range-bound as we anticipate U.S. data on GDP and PCE inflation.”
Pranav Mer, VP of Research at BlinkX and JM Financial, mentioned, “Chart-based selling was observed in bullions after key supports were breached, with gold at $2,380 in the overseas market. The next support levels are now anticipated around $2,349 and $29.5 in Silver.”
Spot silver took a hit, falling by 4.8% to $27.6 per ounce, marking an 11-week low. Platinum also dropped by 1.5% to $933.68, nearing a three-month low, while palladium fell by 2.9% to $905.32.
