Mubasher TV
Contact Us Advertising   العربية

Gold drops on stronger dollar, but rate-cut hopes keep lid

Gold drops on stronger dollar, but rate-cut hopes keep lid

Mubasher: Gold prices fell on Wednesday, as the dollar firmed on strong US retail sales report, according to Reuters.

However, price declines for the yellow metal were capped by expectations that the Federal Reserve would cut interest rates later this month as well as widespread uncertainties regarding the trade ties between the US and China.

By 10:08 am GMT, spot gold declined by more than 0.3% to $1,401.42 per ounce, while US gold futures dropped by 0.6% to $1,402.80 per ounce.

The dollar recorded its highest level in one week on Tuesday after the US Commerce Department announced a robust retail sales growth in June, indicating that consumption remained a deep reservoir of strength for the American economy.

At 10:10 am GMT, the US dollar index, which gauges the greenback against a basket of six major peers, inched down by 0.06% to 97.34.

However, an interest rate cut by the Fed is still expected, according to Singapore-based dealer GoldSilver Central managing director Brian Lan.

Positive US retail data barely changed bets on the Fed’s move to reduce borrowing costs later this month, with futures are still 100% priced for a 25-basis-point cut, and an implied 27% chance of 50 basis points (bps).

“The four largest central banks are set to unleash fresh stimulus in the second half of the year,” a note OANDA senior market analyst Edward Moya was quoted by Reuters.

In addition, lending support to the precious metal was the fact that “the US and China are not close to any resolution at this point of time and a lot of central banks continue to buy gold, particularly China,” Lan was quoted by the news agency.

US President Donald Trump on Tuesday said that there was still a long way for Washington to ink a trade deal with Beijing, noting that an additional $325 billion in Chinese goods would be subject to tariffs, if there was need for such a measure.