In European trade on Monday, gold prices resumed their upward trajectory, edging closer to a four-week high as the U.S. dollar decelerated in comparison to major global currencies.
The dollar’s deceleration followed a series of disappointing U.S. economic data releases, fueling speculations that the Federal Reserve may have already concluded its current cycle of monetary tightening.
Current Gold Prices
Gold prices surged by 0.3% to reach $1,946 per ounce during Monday’s session, momentarily touching a session low at $1,939 per ounce. This followed a marginal 0.1% decline on the previous Friday, marking the second consecutive day of losses but remaining within striking distance of the four-week peak at $1,953.
The past week was favorable for gold, with a 1.3% increase, marking the second consecutive week of gains. These gains coincided with a drop in the value of the U.S. dollar and yields on U.S. treasuries, accompanied by a diminishing likelihood of a U.S. interest rate hike.
Dollar’s Performance
The U.S. dollar index faced a decline of over 0.2% on Monday, extending its losses against a basket of key global currencies. It’s important to note that trading was relatively thin due to the observance of the U.S. Labor Day holiday.
Impact of Weak Data
Recent U.S. economic data releases have painted a less optimistic picture. Reports indicate that unemployment increased to 3.8%, while average hourly earnings witnessed a decline, and the manufacturing sector continued to grapple with challenges in August. This data suggests that the U.S. economy may be slowing more than initially anticipated, which, in turn, diminishes the prospects of another interest rate hike by the Federal Reserve this year.
U.S. Interest Rates
At present, the likelihood of a 0.25% interest rate hike during the September Federal Reserve meeting stands at a mere 7%. In contrast, the probability of a similar rate hike during the November Fed meeting is notably higher at 38%.
Awaiting Insights from Fed Officials
In the upcoming week, investors are keenly awaiting various speeches by Federal Reserve officials to gain insight into the possible course of U.S. monetary policies.
SPDR Gold Holdings
In an interesting development, gold holdings at the SPDR Gold Trust increased by 0.87 tonnes on Friday, bringing the total holdings to 890.97 tonnes. This figure represents the highest level since August 15, underscoring the continued appeal of gold among investors in the prevailing economic environment.
As gold continues to flirt with its recent highs, market participants remain attuned to Federal Reserve developments and economic data releases, which are poised to influence the precious metal’s trajectory in the weeks ahead.
