Spot gold was 0.7% lower at $2,432.29 per ounce, having hit its highest since July 18 earlier in the session

Gold prices slid as the dollar rebounded on Thursday, after bullion reached two-week highs earlier in the session on Federal Reserve Chair Jerome Powell’s indications that a September interest rate cut might be considered.

Spot gold was 0.7% lower at $2,432.29 per ounce, as of 0956 GMT, having hit its highest since July 18 earlier in the session. Prices were just $51 short of the record high of $2,483.60 hit on July 17.

Fed Chair Jerome Powell said on Wednesday rates could be cut as soon as September, putting the central bank near the end of a more than two-year battle against inflation.

Powell putting a possible rate cut in September on the table is supportive for gold. But on the other hand, you now have a slightly stronger U.S. dollar and weaker euro, and that is a negative effect, said Quantitative Commodity Research analyst Peter Fertig.

Market focus now shifts to Friday’s U.S. payrolls report.

If July job growth exceeds expectations, doubts may arise about a September Fed rate cut, Fertig said.

A reminder to not be short gold near range lows, and cognizant that geopolitics is increasingly more supportive in the medium-long-term, Nicky Shiels, head of metals strategy at MKS PAMP SA, stated in a note.

Bullion, traditionally known for its stability as a favoured hedge against geopolitical and economic risks, thrives in a low-interest rate environment.

Central bank gold demand should stay high in 2024/2025 despite the recent absence of ‘reported’ PBOC (People’s Bank of China) gold purchases in May and June, Citi analysts stated in a note.

But that appears unlikely to reverse a wider EM CB (emerging central bank) trend of increasing gold holdings due to de-dollarization, reserve diversification, and alt-fiat demand, they said.