Gold price hike (XAU/USD) have fallen below $2,400, settling at around $2,385, after a three-day rise. This drop is due to a slight recovery in the US dollar and China’s central bank stopping gold purchases for the second month. Despite this, political uncertainties may still support gold’s value as a safe-haven asset.
US Employment Data Impacts Market
In June, the US added 206,000 jobs, which was more than expected but less than the previous month’s 218,000. The unemployment rate increased slightly from 4.0% in May to 4.1% in June. Average hourly earnings went up by 0.3% in June, as expected.
Federal Reserve’s Rate Cut Hopes
The market now sees a 77% chance of a rate cut by the US Federal Reserve in September, up from 70% the previous week. The Federal Open Market Committee (FOMC) minutes showed that inflation is slowing down, which might lead to rate cuts this year. This could weaken the US dollar and boost USD-denominated gold prices.
Political Uncertainty and Safe-Haven Demand
Political issues in Europe, especially in France, and tensions in the Middle East may increase demand for safe-haven assets like gold. According to exit polls, the left-wing New Popular Front is likely to win the most seats in the French parliamentary elections, leading to concerns over a hung parliament.
China’s Pause in Gold Purchases
China’s central bank, the People’s Bank of China (PBoC), has paused gold purchases for the second month. Nitesh Shah, a commodity strategist at WisdomTree, said that gold prices are still high, and the PBoC might be waiting for a further drop before buying again. Since China is the world’s largest gold consumer, this pause could lower gold prices.
Conclusion
Gold prices have dropped below $2,400 due to a stronger US dollar and the PBoC’s pause in purchases. However, political uncertainties and potential US Fed rate cuts might still support gold prices. For more updates on the gold price hike, visit Daily Gold Signal. For daily gold updates, check out this category.
