Market comment on behalf of Frank Walbaum Market Analyst at Naga.com
Gold traded slightly higher early Monday on a lower US dollar and softer Treasury yields as well as receding interest rate hike expectations. The metal remained near a two-month high, benefitting from softer US economic data last week. The CPI, PPI, and retail sales data releases last week supported an increased probability of a hold from the Federal Reserve, priced in at 70%, compared to less than 50% a week ago. The latter could weigh on Treasury yields and support non-yielding assets like gold.
At the same time, central bank buying remains a structural tailwind. The PBoC added 20 tonnes in July, its largest monthly addition since October 2023 in a 21-month streak. The metal could find additional support if the trend continues.
Markets could turn this week to the minutes from the Fed’s July 28-29 meeting, where three of twelve members dissented for an immediate hike, for more indications on the committee’s direction. Kevin Warsh’s Jackson Hole address, his first as Fed chair, ahead of the September 15-16 decision, could also affect markets. However, markets continue to monitor the geopolitical developments in the Middle East amid the current uncertainty, and their impact on oil prices and inflation concerns.
Zaid Barem / ymm
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