Gold prices have surged to new heights, reaching above $2,500 per ounce, driven by growing expectations of a potential US Fed rate cut.
Economic indicators, such as mixed job data and slight improvement in services activity, have strengthened the case for a rate cut. Fed officials have hinted at easing monetary policy to maintain a healthy labor market.
The anticipation of lower interest rates has led to a decline in U.S. Treasury yields and a weaker U.S. dollar, both supportive factors for gold prices, according to a report by Noor Capital.
Traders are positioning themselves ahead of the crucial August Nonfarm Payrolls (NFP) report, which could provide further clues about the Fed’s future policy decisions. From a technical perspective, gold
prices appear to be in a strong uptrend, with the Relative Strength Index (RSI) suggesting buying momentum is gaining traction. A break above the year-to-date high of $2,531 could lead to further
gains.
Gold prices have retreated from a record high of $2,531 per ounce, ending below the psychological $2,500 per ounce mark. The mixed set of US job data released last week has cast doubt on the US Fed
rate cut hopes, dragging the gold price worldwide. However, experts suggest that a US Fed rate cut would enable the central bank to keep the US job market balanced and suggest that US Fed Chairman
Jerome Powell stuck with the rate cut decision in the upcoming US Fed meeting.
Gold prices retreated from near-record highs in the international market towards the end of the week following the release of
key US payroll data. The mixed jobs report, a critical measure of labor market health, reduced the likelihood of a large 50 bps rate cut by the Fed, strengthening the dollar and pressuring gold prices.
Oil Performance
Crude oil prices hit new lows of the year: The S&P Global Commodity index has also hit new lows of the year, driven in part by WTI crude oil prices, which are now around $68 per barrel. The selloff in oil and
commodities also reflect the fears of a demand slowdown globally, particularly in the Chinese market, which has been plagued with softening consumer and economic growth.
The dynamics of US crude oil inventories have an impact on oil prices, and the market is still cautious because of worries about future demand levels, particularly from China and the US. In an attempt to
constrain global supply and maintain prices, the OPEC+ coalition has announced a postponement of the output increases scheduled for October and November. However, the efficacy of this move is still unknown.
The persistent unpredictability surrounding the state of the world economy, especially in China and the United States, continues to affect the oil demand and could result in lower gasoline
costs and usage. The market’s pessimistic outlook has been further reinforced by the recent rise in gasoline stocks in the United States, which raises the possibility of an oil glut in the upcoming months.
The future trajectory of oil prices is highly dependent on factors such as global economic growth, geopolitical developments, and the effectiveness of OPEC+ policies.
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