Gold prices dropped to their lowest point in over a week on Monday, influenced by a strengthening dollar. Market participants are now focusing on forthcoming U.S. economic data and statements from Federal Reserve members this week, aiming to gain insights into the potential timing of interest rate reductions. As of 1635 GMT, spot gold declined by 0.4% to $2,391.21 per ounce, and U.S. gold futures also decreased by 0.3% to $2,392.60. The dollar's ascent continued for the third consecutive session, thereby making gold less affordable for holders of other currencies.
The gold market is currently subdued as investors await clarity on the implications of the Democratic Party's recent shift in leadership for the upcoming elections and global affairs, according to Jeffrey Christian, the managing partner of CPM Group. Joe Biden announced his withdrawal from the U.S. presidential race on Sunday, endorsing Vice President Kamala Harris as the Democratic nominee for the November election. StoneX analyst Rhona O'Connell noted in a report that it is premature to adopt any strategic positions, but a longer-term perspective might be more advantageous for gold if Trump remains in the White House. Trump's policies are anticipated to be inflationary and could escalate geopolitical tensions, whereas Harris' foreign policy stance remains unclear, which currently supports gold prices but may not hold in the long run.
The market is now anticipating the release of U.S. GDP data for the second quarter on Thursday and personal consumption expenditure (PCE) data on Friday. According to CME's FedWatch data, money markets are fully expecting a 25-basis-point cut in the Fed's interest rates by September. Reduced interest rates decrease the cost of holding non-yielding assets like gold. Last week, gold prices reached a record high of $2,483.60 per ounce due to heightened expectations of U.S. interest rate cuts this year. Spot silver decreased by approximately 0.7% to $29.06 after a nearly 5% drop last week. Platinum fell by 1.6% to $947.63, and palladium dropped by 0.2% to $904.18.
