Gold slips but on track to end four-month losing streak, with July prices up 1.7%
Despite a 0.6% decline, spot gold is headed for a 0.6% weekly rise
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[BENGALURU] Gold fell on Friday (Jul 31) but was on track for its first monthly gain in five months, supported by bargain buying around the US$4,000 level, while investors weighed developments in the Middle East and their impact on US rate outlook.
Spot gold fell 0.6 per cent to US$4,076.53 per ounce as at 0253 GMT, but was headed for a weekly rise of 0.6 per cent. Prices were up about 1.7 per cent this month.
US gold futures for August delivery lost 0.4 per cent to US$4,074.20.
“Gold is showing a mild negative bias today amid profit taking and a moderate bounce in the US dollar, following the metal’s gains yesterday and the corresponding fall in the greenback,” said Tim Waterer, chief market analyst at KCM Trade.
The dollar gained about 0.3 per cent, after diving 2.4 per cent in its biggest single-day drop since January 2023 on Thursday.
A stronger US currency makes dollar-denominated commodities more expensive for overseas buyers.
However, “gold has had a better run of things this month. A key support has been the metal finding a cushion of sorts around the US$4,000 level, which has attracted buyers on dips,” Waterer said.
On Wednesday, the US Federal Reserve left interest rates unchanged at its policy meeting, and chair Kevin Warsh gave little indication on the central bank’s next policy move.
Markets are now pricing in a 63 per cent chance of a rate hike in September, according to CME Group’s FedWatch tool.
While gold is often seen as a hedge against inflation, higher interest rates can dampen its appeal by raising the opportunity cost of holding the non-yielding asset.
In the Middle East, a drone strike that sparked fires on two gas vessels in Egypt’s Mediterranean port of Damietta has raised a new threat to shipping through the Suez Canal, one of the last major export routes available to Saudi oil amid the expanding US-Iran war.
“Over the long run, the Hormuz crisis will fade but geopolitical multipolarity, hypo-globalisation, and US fiscal imbalances will support gold as a hedge against US assets,” analysts at BCA Research said in a note.
Spot silver fell 0.8 per cent to US$58.48 per ounce. Platinum slid 1.7 per cent to US$1,631.77, and palladium fell 0.8 per cent to US$1,294, but both metals were headed for a monthly gain. REUTERS
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