Gold prices (XAU/USD) experienced mild losses on Monday, trading close to the $2,500 psychological support level. Despite this, the downside risk for gold may be limited by growing expectations that the US Federal Reserve (Fed) will commence interest rate cuts in September. Lower interest rates typically benefit gold by reducing the opportunity cost of holding a non-yielding asset.
In addition, escalating geopolitical tensions in the Middle East and ongoing economic uncertainty are likely to enhance demand for gold as a safe-haven asset. Conversely, sluggish demand in the Chinese economy, the world’s largest gold producer and consumer, could weigh on the precious metal.
Market participants will be closely watching several key economic reports later this week. On Monday, the US is set to release its July Durable Goods Orders. The spotlight will then turn to the preliminary US Gross Domestic Product (GDP) Annualized data for the second quarter, scheduled for Thursday, and the Personal Consumption Expenditures-Price Index (PCE) for July, set for Friday. These reports are anticipated to provide further insights into the US economic outlook and may influence gold prices accordingly.
