Forex Gold Today - Gold prices are attempting to recover from a more than two-week decline on Friday, starting the new week with a less than encouraging performance. The XAU/USD pair remains cautiously trading throughout the Asian session and is currently trading slightly above the $1,955 level, experiencing a decline of over 0.15% today.

An optimistic U.S. GDP report released last Thursday indicated a strong economy and opened up the possibility for a 25 basis points interest rate hike by the Federal Reserve (Fed) in September or November. It is important to note that Fed Chairman Jerome Powell stated last week that the economy still needs to slow down and the labor market must weaken for inflation to credibly return to the 2% target.

As a result, U.S. Treasury yields continue to rise, which at higher levels helps balance signs of increasing inflationary pressures in the U.S. and supports the U.S. Dollar (USD) to remain stable below the nearly three-week highs reached on Friday. The strengthening of the U.S. Dollar impacts the decline in commodity prices priced in U.S. Dollars, and together with the more hawkish stance of major central banks, this puts pressure on gold prices.

The European Central Bank (ECB) has also noted that although inflation continues to decline, it is expected to remain elevated over the long term, thus supporting further tightening policy adoption. Additionally, the Bank of England (BoE) is expected to raise its benchmark interest rate by 25 basis points on August 3, reaching 5.25%, the highest level since early 2008.

Markets are also projecting that the Bank of England (BoE) is likely to raise interest rates twice more by the end of this year as price pressures persist. Moreover, the Bank of Japan (BoJ) has started the process of reducing the massive monetary stimulus implemented over the past decade and applied a more flexible yield curve control (YCC) policy on Friday.

These conditions indicate that gold price trends are likely to be negative, although speculation regarding the Fed nearing the end of the fastest rate hike cycle since the 1980s may help limit losses.

The U.S. Bureau of Economic Analysis reported that in June, the Personal Consumption Expenditures (PCE) Price Index rose by 0.2%, and over the past twelve months, it increased by 3.0%.

This increase marks the lowest growth figure since March 2021. Additionally, the Core PCE Price Index (which excludes volatile food and energy components) reached a YoY (Year over Year) rate of 4.1%, the lowest increase since September 2021.

This support comes from the U.S. CPI report earlier this month, which showed signs of declining inflationary pressures. This condition would allow the Federal Reserve (Fed) to soften its hawkish stance and support the possibility of some buying activity in the gold market. However, caution is still needed before considering new bearish speculation against gold prices.

Warning!

This analysis is based on views from fundamental and technical perspectives from reliable sources and does not constitute advice or solicitation. Always remember that this content aims to enrich readers' information. Always conduct your own independent research regarding other forex information to use as a reference in your trading.

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