Gold prices plummeted after hitting a two-week high, as the market anticipates faster interest rate cuts by the Federal Reserve.
On Friday, August 2nd, during the New York trading session, gold prices reversed course and plunged nearly 1% after hitting a two-week high of $2477, due to weaker-than-expected US economic data. This put pressure on the dollar and caused US Treasury yields to plummet, as investors anticipated that the Federal Reserve might cut interest rates sooner than they had expected.
Time:
2024-08-03 11:18
On Friday, August 2nd, during the New York trading session, gold prices reversed course after hitting a two-week high of $2477, plummeting nearly 1% due to weaker-than-expected US economic data. This put pressure on the dollar and caused US Treasury yields to plunge as investors anticipated the Federal Reserve might cut interest rates sooner than expected.
Spot gold fluctuated as disappointing US economic indicators weighed on the dollar and US Treasury yields.
Friday's disappointing US non-farm payroll data left investors digesting the discouraging ISM Manufacturing PMI report, raising concerns about the health of the US economy.
The US Department of Labor revealed that 114,000 jobs were added in July, below the expected 175,000, with previous data revised down from 206,000 to 179,000. Further data showed the unemployment rate rising from 4.1% to 4.3%, and average hourly earnings falling from 0.3% to 0.2%, a decrease of one-tenth of a percent. Spot gold prices rose significantly as the US 10-year Treasury yield fell over 15 basis points to 3.815%. The dollar was also affected, US Dollar Index (103.2210, -1.1151, -1.07%), plummeting over 1.13% to 103.16. After the data release, most banks began to factor in expectations that the Federal Reserve would adopt a more aggressive monetary easing policy. Bank of America expects the Fed to cut rates for the first time in September rather than December, while Citi and JPMorgan Chase expect cuts of 50 basis points in September and November, respectively.
Spot Gold Price Analysis: Technical Outlook
Spot gold has retreated to the July 31 low of $2404 - $2410, possibly due to profit-taking ahead of the weekend, as US Treasury yields and the dollar remain at their weekly lows. Technically, spot gold will remain bullish if buyers close above $2,450, which could intensify the challenge to historical highs before the $2,500 mark.
If prices weaken further, gold could fall below $2400, potentially paving the way for a pullback to the 50-day moving average of $2,364, then testing the 100-day moving average of $2337.
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Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.