Gold prices declined close to 1 percent on Thursday as investors booked profits ahead of U.S. economic data releases, which could provide additional insight into the U.S. Federal Reserve‘s interest rate cut.
In the UAE, gold prices lost AED5.50 with 24-carat gold dipping to AED287.75 per gram, while 22-carat gold declined to AED266.50. Twenty-one-carat gold reached AED258 while 18-carat gold reached AED221.
Globally, spot gold fell 0.95 percent to $2,376.28, as of 5:08 GMT. Meanwhile, U.S. gold futures lost 1.71 percent to $2,374.50.
U.S. economic landscape
Fundamentally, there are currently no factors pressuring gold prices. This means the market is witnessing some investor profit-taking which impacts prices.
Markets now await the release of the U.S. gross domestic product data at 12:30 GMT and the personal consumption expenditure (PCE) data, the Fed’s preferred measure of inflation, on Friday for more insight into when the next interest rate cut may occur. If the PCE data reveals that inflation is slowing and the Fed can cut rates in September, gold prices will likely surge.
Traders are currently expecting that the Federal Reserve will deliver a rate cut in September. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.
U.S. elections
In its latest report, the World Gold Council said that while gold prices have not reacted to the outcome of past elections, the outcome of this election may have a more noticeable effect on investor sentiment.
“A continuation of election-related uncertainty and rising geopolitical threats will add more volatility and likely impact broader macro variables. This, in turn, could drive investors to evaluate how they might mitigate risk in their own portfolios and draw them towards a safe-haven asset like gold,” added the report.
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Other precious metals
The precious metals market broadly mirrored the decline in gold prices with spot silver plunging 3.69 percent to $27.92. Palladium lost 1.58 percent to $918.09. However, copper rose 0.21 percent to $4.11. Platinum declined 1.02 percent to $938.43.
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