Gold fell about 0.1% after jumping 0.77% yesterday on the back of US retail sales data, which strengthened the case for easing the Fed's monetary policy at the September meeting.
Today's price correction was due to partial profit-taking and the strengthening of the US currency. Meanwhile, market liquidity is likely to be low today due to the national holiday in the US.
Experts said that although Fed policymakers predict only one rate cut by the end of 2024, market rate expectations are leaning more dovish, while further economic weakness may contribute to an increase in gold prices. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. According to the CME FedWatch Tool, markets see a 12.4% probability of a 25 basis point rate cut at the Fed meeting in July, a 67.6% probability of a rate cut in September, and a 80.0% probability of monetary policy easing in November.
Gradually, the focus of investors' attention is shifting to tomorrow's US data on the housing market and the labor market. Meanwhile, manufacturing PMI and services PMI for June will be presented on Friday. These reports will help to better assess the state of the US economy and, perhaps, clarify the prospects for easing the Fed's monetary policy.