Gold slips from two-week high as dollar edges up

Gold prices fell on Monday, retreating from a nearly two-week high, as the US dollar rose slightly.

Despite the pullback, the precious metal continues to enjoy solid support amid growing expectations of an interest rate cut following a cautious shift in tone by Federal Reserve Chair Jerome Powell last week.

Expert analysis, Powell’s cautious signals

Analysts say Powell’s measured remarks have laid a firm foundation for gold. Matt Simpson, senior analyst at City Index, noted that gold has strong near-term support around USD 3,350 per ounce, adding that Powell’s hints “allowed gold to form a prominent floor on Friday.”

On Friday, Powell signaled the possibility of a rate cut at the Federal Reserve’s next meeting, citing rising risks to the labor market while emphasizing that inflation remains a threat and no decision has yet been made.

However, Simpson warned that any sustained rally in gold will require weaker inflation data and softer employment figures in the coming period, noting that persistently high inflation could limit the yellow metal’s gains.

Market expectations, rate implications

Investors are now focused on the Fed’s annual symposium in Jackson Hole, Wyoming, as well as the release of US personal consumption expenditure (PCE) data on Friday.

Markets currently price in an 87 percent probability of a 25-basis-point rate cut at the September 17 policy meeting, according to the CME FedWatch tool. Gold typically performs well in a low-interest-rate environment, as the opportunity cost of holding it declines.

Current price movements

• Gold: Spot gold fell 0.2 percent to USD 3,365.83 per ounce, after hitting a high last Friday not seen since August 11. US gold futures for December delivery also dropped 0.2 percent to USD 3,410.20.
• Dollar: The dollar index rose 0.2 percent against a basket of currencies, making gold less attractive to foreign buyers.
• Other metals: Spot silver held steady at USD 38.81 per ounce, platinum declined 0.4 percent to USD 1,355.47, and palladium dropped 0.8 percent to USD 1,116.82.