Gold’s Chill: Two-Day Breather After Yesterday’s Surge
Gold wrapped up two days of gains in a steadier line, opening Tuesday at $2,329.30 per ounce after hitting yesterday’s high of $2,345. What’s keeping the metal calm? The US dollar’s loosening grip.
Why the Dollar’s Weakening Matters
- Softening US dollar makes gold more attractive.
- Japanese authorities allegedly swapping dollars for yen to shore up their currency – big sell‑off in the process.
- Investors now prefer cash returns over a zero‑yield gold.
From Record Highs to Lateral Moves
Gold’s recent record high of $2,430 in mid‑April was a result of the US deciding to keep interest rates higher for longer. That decision knocked the metal’s shine as investors felt cash was a better bet.”
In short, high inflation in the US pushes expectations for only one 0.25% rate cut in 2024, dropping the previously priced three cuts. That makes holding gold a bit less enticing.
Next‑Week Fed Meeting: The Turning Point?
When the Fed meets this Wednesday, we’ll know if rates are truly going to stay high. Until then, gold prices might stay low, especially if economic data and stubborn inflation hold steady. However, if surprises hit the markets, futures could turn spicy again.
What Could Make Gold Re‑Spruce?
The mix of Western demand and Chinese buying power suggests that gold could climb back above last records. A lofty target above $2,500 could play out, but it’s a dim probability.
Geopolitical Tides
- Peace talks between Israel & Gaza in Cairo light a hopeful glow, pulling liquidity away from gold.
- Yet, recent attacks on Russian oil refineries and Ukraine’s plea for more US military help keep war‑risk gold a hedge.
Why Inflation Still Gives Gold an Edge
US inflation figures that refuse to drop reinforces gold’s role as an inflation shield. That, combined with the Fed’s upcoming meeting and expectations from Powell’s remarks, keeps the metal in play.
Watch the Calendar
Dozens of US data releases are on the docket for early next month. The Non‑Farm Payrolls (NFP) report on Friday is especially pivotal – it could decide whether gold keeps riding or drops.
