Gold prices retreated on Monday as market participants exercised caution ahead of upcoming U.S. economic data releases. The latest reports indicated a stabilization in inflation, bolstering expectations that the Federal Reserve could enact interest rate cuts later this year.
At 0753 GMT, spot gold was down 0.5% to $2,318.79 per ounce, following a more than 1% increase on Friday. Similarly, U.S. gold futures fell 0.6% to $2,333.50.
Kyle Rodda, a financial market analyst at Capital.com, explained, “Today’s modest decline likely reflects a correction from Friday’s gains.” He emphasized the gold market’s long-term bullish fundamentals, which remain contingent on forthcoming economic data.
Upcoming U.S. economic indicators include retail sales data on Tuesday, weekly jobless claims on Thursday, and flash PMIs on Friday. Additionally, several Federal Reserve officials are scheduled to deliver speeches throughout the week.
Rodda noted, “With signs of economic softness potentially weakening the U.S. dollar and heightening expectations of future rate cuts, gold is strategically positioned to benefit.”
Recent data revealed a moderation in U.S. price pressures, signaling a possible slowdown in the labor market and reinforcing anticipations of a rate cut in September.
According to the CME Group’s FedWatch Tool, traders now see a 67% probability of a September rate cut, up from 63% prior to Thursday’s producer prices data release.
Minneapolis Fed President Neel Kashkari suggested on Sunday that a rate cut this year is a “reasonable prediction,” with December being a possible timing.
Lower interest rates typically diminish the opportunity cost of holding non-yielding assets like gold.
In other precious metals, spot silver declined 1.4% to $29.11 per ounce, platinum dipped 0.9% to $949.05, while palladium remained stable at $890.58.
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