Gold prices rise on weak U.S. economic readings, Fed rate pause likely

One sentence summary – Gold prices have reached their highest level in almost a month as weak U.S. economic readings have raised the possibility of the Federal Reserve halting its interest rate hikes, with market participants eagerly awaiting further data to assess the direction of the economy.

At a glance

  • Gold prices reached their highest level in nearly a month
  • Surge driven by weak U.S. economic readings
  • Increased likelihood of Federal Reserve pausing interest rate hikes
  • Spot gold experienced a 0.5% increase to $1,945.81 per ounce
  • Probability of Fed leaving interest rates unchanged in September rose to nearly 91%

The details

Gold prices reached their highest level in nearly a month on Wednesday.

This surge was driven by weak U.S. economic readings.

These readings have increased the likelihood of the Federal Reserve pausing its interest rate hikes.

Spot gold experienced a 0.5% increase.

This brought it to $1,945.81 per ounce.

This is just below its peak since August 2.

U.S. gold futures also rose.

They increased by 0.5% to $1,974.00.

The ADP report showed unexpected weakness.

The GDP was also revised, indicating softer economic indicators.

These factors may prompt the Fed to keep interest rates on hold in September.

As a result, benchmark 10-year yields fell to their lowest level since August 11.

The dollar also slipped to a two-week low.

When yields fall, dollar-priced bullion, which does not bear interest, typically finds support.

Following the release of this data, the probability of the Fed leaving interest rates unchanged in September rose.

It rose to nearly 91%.

The likelihood of a pause in November also increased.

It rose to approximately 59%.

Market participants are now awaiting the PCE price index on Thursday.

They are also awaiting the nonfarm payrolls report on Friday.

These are expected to provide further insights into the economy’s direction.

Traders had established short positions in the market.

This led to a significant rally in the past week.

However, the market’s direction will ultimately be determined by key inflation and payrolls data.

According to ActivTrades senior analyst Ricardo Evangelista, bad news for the economy is perceived as good news for gold.

Gold prices have surged to their highest level in nearly a month due to weaker-than-expected U.S. economic readings.

This has increased the likelihood of the Federal Reserve pausing its interest rate hikes.

The market is now eagerly awaiting the PCE price index and nonfarm payrolls report to gauge the economy’s trajectory.

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cnbc.com
– Gold reached its highest level in nearly a month on Wednesday.
– Weak U.S. economic readings have increased the likelihood of the Federal Reserve pausing its interest rate hikes.
– Spot gold rose 0.5% to $1,945.81 per ounce, just below its highest level since August 2.
– U.S. gold futures also rose 0.5% to $1,974.00.
The weaker-than-expected ADP report and GDP revision indicate softer economic indicators that may keep the Fed on hold in September.
– Benchmark 10-year yields dropped to their lowest level since August 11, while the dollar slipped to a two-week low.
– Dollar-priced bullion, which does not bear interest, tends to find support when yields fall.
– Bets on the Fed leaving rates unchanged in September rose to nearly 91% after the data.
– Bets of a pause in November also increased to nearly 59%.
– Investors are now awaiting the PCE price index on Thursday and the nonfarm payrolls report on Friday.
– Traders were short in the market, leading to a smart rally in the past week.
– Key inflation and payrolls data will determine the market’s direction.
– Bad news for the economy is seen as good news for gold, according to ActivTrades senior analyst Ricardo Evangelista.

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