Gold prices continued their downward trend, reaching a two-week low on Wednesday, driven by a significant sell-off in equities that prompted a scramble to meet margin calls. This situation intensified the pressure on gold ahead of the highly anticipated non-farm payrolls data scheduled for release later this week.

Spot gold dropped by 0.2% to $2,488.11 per ounce as of 1118 GMT, marking its lowest point since August 22. Similarly, U.S. gold futures also declined by 0.2% to $2,519.10. "Gold is experiencing some mild pressure this morning due to the weakness in equities—this is typical as there might be some selling to address equity-related margin calls," explained StoneX analyst Rhona O'Connell. "Other precious metals are also down, partly due to sympathy, but more likely in reaction to the poor economic figures from the U.S. yesterday."

U.S. manufacturing saw a moderate contraction in August, with slight improvements in employment, but a decrease in new orders and an increase in inventory hinted at continued subdued factory activity. Global shares took a hit on Wednesday, influenced by a decline in tech stocks following a record sell-off by U.S. chipmaker Nvidia and concerns over diminishing global growth affecting riskier assets.

Gold continues to face pressure despite the risk-off sentiment... the precious metal may experience additional volatility on Wednesday due to upcoming U.S. factory orders and JOLTS labor market data, which could impact expectations for Fed rate cuts," noted FXTM senior research analyst Lukman Otunuga. "The key event this week is Friday’s U.S. jobs data. Investors may use this as a benchmark for how quickly or slowly the Fed will reduce rates from September onwards, potentially causing significant fluctuations in gold prices."

According to the CME Group's FedWatch Tool, traders currently estimate a 39% chance of a 50-basis-point rate cut on September 18 and a 61% chance of a 25-basis-point cut. In other markets, spot silver decreased by 0.1% to $28.01 per ounce. Platinum rose by 0.3% to $905.85, while palladium fell by 0.4% to $934.90.