Gold Prices Fall Approximately 2%
Gold prices fell approximately 2% in Friday trading on global markets, impacted by a stronger US dollar; however, the precious metal still recorded a 1.1% gain for July, marking its first monthly increase in five months.
Spot gold, after recording a 2% drop in early Friday trading, later pared losses to trade down 1.3% at $4,049.83 per ounce.
Gold futures for August delivery on US markets closed 1.3% lower at $4,107 per ounce.
The precious metal rose 1.1% in July, its largest monthly gain since February. This price increase was largely driven by the release of milder inflation data, which prompted traders to adjust their expectations for Federal Reserve rate hikes this year. Additionally, the decline in oil prices to pre-aggression levels against Iran from early July also played a role in this trend.
The US dollar held steady in Friday trading after recording its largest one-day drop since January 2023 on Thursday, falling 2.4%. A stronger dollar makes gold more expensive for foreign buyers holding other currencies.
Han Tan, chief market analyst at Bybit exchange, said that although gold ended its four-month downtrend, the precious metal is struggling to consolidate its position well above the psychological $4,000 level. He said gold prices remain supported above $4,000 amid expectations that Fed Chair Kevin Warsh may expand the central bank’s focus beyond targeted inflation indicators and interest rate hikes.
Data released last Thursday showed that US inflation declined in June, but the decline is likely temporary as the war of aggression against Iran has pushed oil prices higher.
Warsh last week, without signaling readiness to raise rates, committed to reducing inflation.
According to a Reuters report, markets are pricing in a 65% probability of a US rate hike in September, based on CME’s FedWatch tool.
In the other precious metals market, spot silver fell 2.1% to $57.76 per ounce.
Platinum fell 0.6% to $1,650.14 per ounce, and palladium fell 1.8% to $1,281.18 per ounce. However, both precious metals recorded monthly price gains.