Gold prices remained stable as investors focused on upcoming U.S. economic data that may reveal insights into the Federal Reserve’s monetary policy direction. As of the early morning hours, spot gold was trading at $3,734.04 per ounce, while U.S. gold futures for December delivery held steady at $3,765.20.
The dollar index experienced a minor decline of 0.1%, rendering gold, priced in U.S. dollars, more affordable for international buyers. The slight depreciation of the dollar provided some support for bullion prices.
Mary Daly, President of the San Francisco Federal Reserve Bank, indicated her complete backing for the Fed’s recent decision to lower interest rates. She anticipates further rate cuts in the future. This shift in policy may signal a move to stimulate the economy more vigorously, particularly with a focus on labor market conditions, according to Ilya Spivak, head of global macro at Tastylive. He remarked that initial support levels for gold appear to be around $3,700 and $3,600, while breaking through resistance levels near $3,790 could open opportunities for prices to rise towards $3,870-$3,875, and potentially reach $4,000.
Recent comments from Fed Chair Jerome Powell highlighted the intricate balance required between managing inflation risks and the weakening job market as the Fed strategizes its policy decisions. Investors are particularly interested in the personal consumption expenditures (PCE) price index report, set to be released on Friday. This measure is the Fed’s preferred indicator for inflation and is projected to show a month-on-month increase of 0.3% for August and a 2.7% rise year-on-year, as indicated by a Reuters poll. However, Brian Lan, Managing Director of GoldSilver Central, expressed skepticism about the impact of this data on gold prices unless the figures are significantly higher than anticipated, reinforcing a bullish long-term outlook on the market.
Additionally, the weekly U.S. jobless claims report, expected later on Thursday, could shed light on current labor market conditions and may further influence market sentiment. As analysts speculate, broad expectations indicate that the Fed may implement two more rate cuts of 25 basis points each in October and December. Historically, safe-haven assets like gold tend to perform well in low interest rate environments, as evidenced by gold reaching a record high of $3,790.82 just two days prior.
In related markets, spot silver experienced a slight decline of 0.2%, trading at $43.83 per ounce. Meanwhile, platinum saw a marginal dip of 0.1% to $1,470.66, while palladium increased by 0.1%, reaching $1,210.96.
