Gold Futures See Mild Decline as Market Adjusts to Political News
On Monday, gold futures experienced a slight decline, with the August contract settling at $2,394.70, just under the key $2,400 per ounce mark. The contract opened at $2,403.70 and reached an intraday high of $2,414.14 before retreating.
As of 5:15 PM ET, the precious metal had lost $4.40 from the previous close. Gold’s initial reaction to President Biden’s unexpected withdrawal from the presidential race was subdued, with prices briefly touching their daily high before slipping to $2,385.20 and then partially recovering.
Jeffrey Christian, managing partner at CPM Group, commented, “The gold market remains quiet today as participants await clarity on what the change in the Democratic candidacy will mean for the election and broader geopolitical landscape.”
Rhona O’Connell, an analyst at StoneX, discussed the potential long-term impact of a Trump presidency on gold. She indicated that such an outcome could be beneficial for gold due to anticipated inflationary pressures and geopolitical tensions. However, she cautioned that it is too early to make strategic moves based on current developments.
Focus is now shifting to upcoming economic reports. On Thursday, the U.S. will release its second-quarter Gross Domestic Product (GDP) data, followed by the Personal Consumption Expenditures (PCE) Price Index on Friday. The PCE report, a key inflation gauge for the Federal Reserve, will provide crucial insights ahead of the Fed‘s July 31 meeting.
MarketWatch reports that inflation is expected to have risen at an annualized rate of 2.5% in June, down slightly from 2.6% in May. This data could reinforce expectations that the Federal Reserve will keep its benchmark rate unchanged at the upcoming meeting, with only a 2.6% chance of a rate cut.
Looking further ahead to September, the probability of a quarter-point rate cut remains high, with the CME’s FedWatch tool indicating a 91.2% chance. There is only a 5.8% chance that rates will remain steady and a 2.4% likelihood of a half-point cut.
As traders anticipate these significant economic indicators, gold prices are expected to remain responsive to changes in monetary policy expectations and ongoing political developments. The metal continues to be regarded as a safe-haven asset during periods of economic and political uncertainty.
