As markets brace for a shortened trading week due to the Independence Day holiday in the United States, gold investors are closely monitoring a series of critical economic events that could influence the precious metal’s price trajectory in the near term.
With Canadian markets closed for Canada Day and U.S. markets set for early closure on Wednesday and a full day off on Thursday, attention centers on three key occurrences: Federal Reserve Chairman Jerome Powell’s address at an international conference on Tuesday, the release of last month’s Federal Open Market Committee (FOMC) meeting minutes on Wednesday, and the U.S. nonfarm payrolls report on Friday.
These events follow Monday’s release of the Institute for Supply Management’s (ISM) June PMI data, which showed a decline to 45.5, marking the third consecutive month of contraction in U.S. manufacturing. This report suggests a potential cooling of inflation, aligning with last week’s Personal Consumption Expenditures (PCE) report that indicated continued diminishment of inflationary pressures, moving closer to the Fed‘s 2% target.
Market expectations, as reflected in the CME FedWatch tool, now show a 91.2% probability that the Fed will maintain its current benchmark rates between 5.25% and 5.5% at the July FOMC meeting. However, the likelihood of a rate cut at the September FOMC meeting has increased to 65.3%, up from 62.4% on Friday and 45.8% just over a month ago.
This growing optimism for rate cuts by September has provided firm price support for gold, though significant price movements remain limited. Investors eagerly await Chairman Powell’s speech and the FOMC meeting minutes for further insights into the Fed’s monetary policy outlook. Following these events, focus will shift to the jobs report later in the week, with market participants hoping to glean information about the timing and number of potential rate cuts this year.
As of 5:15 PM ET, gold futures for the most active August contract are priced at $2,341.90, reflecting a daily gain of $5.00. The precious metal traded within a range of $2,328.20 to $2,348.80, opening in New York at $2,336.20. A slight dip in the U.S. dollar, with the index declining by 0.04% to 105.837, provided minimal tailwinds for gold prices.
In this climate of economic uncertainty and anticipation, gold investors remain vigilant, carefully analyzing each piece of data and commentary for clues about the future direction of interest rates and, consequently, the potential performance of the yellow metal in the coming months.
