Gold Prices Decline as Geopolitical Tensions Ease and Awaiting U.S. Inflation Data
Gold prices fell on Monday, August 11, influenced by a decrease in geopolitical concerns, which reduced demand for it as a safe-haven asset, while investors' focus shifts towards upcoming U.S. inflation data, which may provide signals regarding the Federal Reserve's interest rate policy.
Spot gold recorded a decline of 0.5% to reach $3,378.99 per ounce, after touching its highest levels since July 23 last Friday. U.S. gold futures for December delivery also fell by 1.5% to $3,439.70.
Matt Simpson, senior analyst at "City Index," noted that "the easing of geopolitical tensions surrounding the war in Ukraine has driven gold further down, following Friday's announcement of a meeting between U.S. President Donald Trump and Vladimir Putin on U.S. soil." Trump had announced a meeting with his Russian counterpart on August 15 in Alaska to discuss ending the Ukrainian war.
Analysts expect that the U.S. Consumer Price Index data, scheduled to be released on Tuesday, will show a 0.3% increase in the core index, bringing the annual rate to 3.0%, exceeding the Federal Reserve's target of 2%.
Simpson commented, "A high reading may strengthen the dollar and limit gold gains, but I expect support levels to generally hold, as investors seek to seize buying opportunities at lower prices."
The recent U.S. jobs report, which was weaker than expected, has fueled speculation about the Federal Reserve cutting interest rates in September, with markets pricing in nearly a 90% chance of this cut, along with expectations for additional cuts before the end of the year. Gold, as a non-yielding asset, benefits from lower interest rates.
In a related context, gold speculators on the "Comex" increased their net long positions by 18,965 contracts, bringing the total contracts to 161,811 during the week ending August 5.
Markets are also awaiting developments in trade talks between Washington and Beijing, as the deadline set by Trump on August 12 for reaching an agreement approaches.
Other precious metals also saw declines, with silver dropping by 0.8% to $38.02 per ounce, platinum falling by 0.9% to $1,320.45, while palladium decreased by 0.3% to $1,122.69.
