The dollar strengthened on Friday, and some investors booked profits after the metal’s recent run due to growing anticipation of a U.S. interest rate reduction in September. As a result, gold prices fell more than 1%. At $2,404.34 per ounce, spot gold was down 1.7% from its peak. On Wednesday, gold reached a record-breaking $2,483.60.
2% decline to $2,406.50 was seen in US gold futures. The benchmark 10-year Treasury yield increased along with a 0.1% increase in the value of the US dollar, which put pressure on bullion. “If prices close below $2400 today, reaching $2500 in the near term could prove challenging.”
Based on the CME FedWatch Tool, markets project a 98% probability of a rate cut by the U.S. Federal Reserve in September. In a situation with low interest rates, non-yielding bullion’s attraction usually shines.
The Fed Chair stated earlier this week that recent inflation data “add somewhat to confidence” that the rate of price increases is gradually reverting to the central bank’s aim. If the U.S. GDP report, expected next week, indicates a slowdown in the country’s economy, gold may reach or retrace its record high from Wednesday.
