The price of gold has hardly changed, despite the strengthening of the US currency and rising US bond yields, while market participants are waiting for further signals to assess the timing and pace of easing of the Fed's monetary policy.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.18% to 103.15. Meanwhile, the yield on 10-year US Treasury bonds rose by 4.2 basis points, to 3.929%.
The latest US economic data has forced investors to reconsider their expectations for a Fed rate cut, and now futures impose 105 basis points of cuts this year. According to the CME FedWatch Tool, markets see a 66.5% probability of a 0.5% rate cut in September (up from 85% yesterday), and a 58.6% probability of 0.25% rate cut in November (up from 45% yesterday).
Meanwhile, China's data showed that export growth unexpectedly slowed in July, while imports grew much more than forecast. As a result, the trade surplus decreased to $84.65 billion from $99.05 billion in June. Economists had expected a decline to $99 billion. The Chinese economy has struggled to gain momentum despite government efforts to stimulate domestic demand following the pandemic. A protracted property slump and fears about job security have dragged heavily on consumer confidence.
As for gold's outlook, experts believe that the precious metal will be supported by ongoing tensions in the Middle East and concerns about a global recession. Meanwhile, the United States has informed Iran and Israel that the conflict in the Middle East should not escalate.