This week, gold price fell below $2,520 an ounce as traders awaited new indications regarding the extent of the Federal Reserve's impending interest rate reduction.
A Rate Cut Possibility By The Fed
The rate cut possibility is supported by the Fed's dovish remarks, which have highlighted growing labor market risks while conveying confidence that price growth will return to target. Furthermore, as precious metal lowers the potential cost of keeping non-interest-paying resources, US Federal Reserve (Fed) Chair Jerome Powell's remarks at the Jackson Hole symposium this past week, indicating that the "time has come" to begin reducing interest rates, could be favorable for the precious metal.
Data To Watch
According to CME FedWatch Tool, traders are estimating a 71% chance of a 25 bps reduction and a 29% likelihood of a more significant 50 bps cut in the expected September rate drilled.
Markets are also accounting for a 100 bps reduction in cuts overall for the rest of the fiscal year, which would reduce the potential cost of retaining non-interest-bearing property.
Elsewhere, heightened Middle East conflicts have consistently increased bullion's allure as a safe haven.
The focus will be on the Personal Consumption Expenditures (PCE) Price Index data and the initial US Gross Domestic Product (GDP) Annualized for the subsequent quarter (Q2), which are scheduled for release on Thursday and Friday, accordingly. Positive surprises could strengthen the US dollar (USD) and limit the increase in the price of gold denominated in USD.
