Gold settles near its record levels today
Gold prices fell on Thursday to the levels of 3,515 dollars per ounce in volatile trading, heading to break their longest winning streak since March, in a natural corrective movement after the strong rises witnessed by the precious metal recently.
However, the price remained near all-time highs, supported by a global economic environment full of uncertainty, as it has risen again now near the levels of 3,540 dollars per ounce.
Basic ascent catalysts
- Expectations for the start of monetary easing: recent US economic data have reinforced expectations that the Federal Reserve (US central bank) will start cutting interest rates soon, possibly before the end of this month.
Low interest rates reduce the cost of owning non-yielding gold, making it more attractive to investors.
- Growing demand for safe havens: escalating trade and political tensions, as well as concerns about global debt levels and the independence of the US central bank, have contributed to pushing investors towards the yellow metal as a traditional safe haven to protect their funds from volatility.
Short-term stress factors
The session saw a tight sell-off on the metal for the following reasons:
- Take profit: after making large consecutive gains, some traders resort to selling their positions for actual profits, which puts temporary pressure on the price.
- International trade developments: the Trump administration's appeal of the court ruling that canceled most of the global tariffs has added another layer of uncertainty, prompting some investors to wait on the sidelines until the picture becomes clear.
A look into the future: economic data sets the next course
July data showed a larger-than-expected decline in available jobs in the United States, these figures confirm the slowdown in labor demand, and reinforce market expectations that the Federal Reserve will cut interest rates later this month.
The market is now waiting for a set of crucial US economic data that will give a clearer picture of the health of the economy and the timing of interest rate cuts:
- Labor market data: applications for unemployment benefits and employment data from ADP on Thursday.
- The big monthly report: the nonfarm payrolls report (NFP), which will be released on Friday.
