Gold prices (XAU/USD) remained steady around $2,455 during the early Asian trading session on Friday, displaying a muted performance as the precious metal oscillated between slight gains and losses in response to movements in the US Dollar (USD). Market participants are closely monitoring key economic indicators such as the preliminary US Michigan Consumer Sentiment Index for August, along with data on Building Permits and Housing Starts.
Recent positive employment figures and robust retail sales data have tempered speculative interest in the US economy, alleviating concerns about a potential recession. Despite this, traders continue to anticipate the Federal Reserve (Fed) initiating monetary policy easing measures in September. Current market sentiment, as reflected in the CME FedWatch Tool, indicates an approximately 80% probability of a rate cut next month, with expectations of a cumulative 200 basis points reduction over the next year, contingent on incoming economic data.
Preliminary data from the US Census Bureau released on Thursday revealed a 1.0% month-on-month increase in Retail Sales for July, surpassing expectations following a 0.2% decline in June. Additionally, Initial Jobless Claims for the week ending August 10 came in at 227K, beating estimates of 235K and marking a decline from the previous week’s 234K. The recent string of positive job market indicators and strong retail sales figures has bolstered the USD across the board, exerting downward pressure on gold prices.
Despite these factors, heightened geopolitical tensions in the Middle East are poised to offer some support to gold, known for its safe-haven appeal. Reports from Gaza’s Health Ministry indicate a devastating toll, with over 40,000 Palestinians reportedly killed in Israeli attacks since October 7. The ongoing turmoil in the region, as reported by local sources like Aljazeera, underscores the potential for geopolitical uncertainties to influence the trajectory of gold prices in the near term.
