Welcome to Extreme Investor Network, where we deliver valuable insights and analysis on the stock market, trading, and Wall Street. Today, we dive into the impact of the US dollar on gold prices amidst speculations of a Federal Reserve rate cut.
The US dollar has surged to a two-week high against the euro, driven by market adjustments ahead of a potentially more cautious Federal Reserve. Market sentiment currently suggests a 70% likelihood of a 25 basis points rate cut in September, with only a 30% chance of a larger 50 bps reduction. The dollar has also strengthened against the yen, supported by rising long-term Treasury yields hitting their highest levels since mid-August.
In other news, the PCE Price Index for July showed a 2.5% year-on-year increase, slightly below expectations. However, the core PCE, excluding food and energy prices, rose by 2.6% year-on-year, missing the expected 2.7% increase. Despite these figures, the potential for a Fed rate cut in September could help cushion gold’s decline, as lower rates reduce the opportunity cost of holding non-yielding assets like gold.
On the international front, China’s economic slowdown adds further pressure on gold prices. As the world’s largest gold consumer, China’s Manufacturing Purchasing Managers’ Index (PMI) fell to 49.1 in August, signaling a contraction in the sector. This ongoing economic weakness in China has diminished gold’s appeal, contributing to recent price declines.
Stay tuned to Extreme Investor Network for more in-depth analysis and unique insights on the latest trends and developments in the stock market, trading, and more. Our expert team is dedicated to providing you with valuable information to help you navigate the complex world of finance with confidence.