Spot gold declined 0.2% at $2,494.56 per ounce and U.S. gold futures steadied at $2,526.40
Gold prices dropped on Tuesday, while investors awaited a slew of U.S. economic data to gauge the size of the Fed’s expected interest rate cut this month.
Spot gold declined 0.2% at $2,494.56 per ounce by 0415 GMT. Prices reached a record high of $2,531.60 on August 20.
U.S. gold futures steadied at $2,526.40.
The dollar stayed near a two-week high, making bullion less appealing for other currency holders.
Gold is unable to recapture levels around all-time highs due to lack of fresh positive catalysts. If we see U.S. data pointing to a weak economy and the Fed taking to the narrative of having a jumbo rate cut, gold will rally, according to Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
Prices could go as high as $2,640 this year, Wong added.
Market focus is on Friday’s U.S. August non-farm payrolls report. Economists surveyed by Reuters expect the addition of 165,000 U.S. jobs.
ISM surveys, JOLTS job openings and ADP employment report are also on investors’ radar.
Traders currently see a 31% probability of a 50bp rate cut at the Federal Reserve’s September 17-18 policy meet and a 69% probability of a quarter-point cut.
Last week, data showed U.S. consumer spending rose in July, arguing against a 50bp rate cut.
Gold remains our preferred hedge against geopolitical and financial risks, with additional support from imminent Fed rate cuts and ongoing emerging market central bank buying. We open a long gold trade recommendation, Goldman Sachs said.
Bullion is considered a safe asset amid turmoil and tends to thrive in a low rate environment.
