Gold Prices Stabilize as Dollar Declines and Interest Rate Cut Expectations Rise
Gold prices maintained their stability during trading on Tuesday, August 5, supported by the decline of the US dollar and lower yields on US Treasury bonds, as weak employment data reinforced expectations that the Federal Reserve would cut interest rates in September.
Gold recorded $2369.89 per ounce in spot transactions, while US futures settled at $2424.20.
The decline in the dollar index, which approached its weekly lows, contributed to enhancing the appeal of the yellow metal to buyers in other currencies. The drop in the yield on ten-year US Treasury bonds to its lowest level in a month also supported gold.
US employment data for July came in weaker than expected, with the number of jobs in May and June revised down by 258,000 jobs, indicating a slowdown in the labor market.
In this regard, Kelvin Wong, senior market analyst at OANDA, told Reuters: "The fundamental driver supporting gold right now is the belief that the Federal Reserve is still in a comfortable position to actually start cutting interest rates in September."
Market expectations, according to the CME Group's FedWatch tool, indicate a 92% chance of an interest rate cut at the upcoming September meeting.
For her part, Mary Daly, president of the Federal Reserve Bank of San Francisco, confirmed that the time is approaching to lower interest rates, amid signs of a slowdown in the labor market and insufficient evidence of sustained inflation related to tariffs.
Gold, as one of the most prominent safe-haven assets, benefits from lower interest rates and waves of economic uncertainty, due to the reduced opportunity cost of holding it.
In a related context, US President Donald Trump reignited trade tensions after threatening to impose additional tariffs on Indian goods in response to New Delhi's continued purchase of Russian oil. India described these threats as "unjustified," reaffirming its commitment to protect its economic interests.
In other precious metal markets, silver rose by 0.1% to $37.44 per ounce, while platinum was recorded at $1330.31, and palladium increased by 0.2% to $1204.25.
