The price of gold rose by about 0.7%, retreating from the lowest level since July 3, reached yesterday. Meanwhile, since the beginning of the week, precious metal prices have fallen by 1.15%.
Today's price recovery was caused by a partial profit-taking after yesterday's collapse, as well as a correction of positions by investors ahead of the publication of US inflation data.
Meanwhile, the US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose 0.02% to 104.37.
The U.S. personal consumption expenditure data for June — the Fed’s favored measure of inflation — is due at 12:30 GMT. Economists forecast that the core PCE price index rose by 0.1% m/m after a similar increase in May. The Fed meets next week and is expected to stand pat on rates this time, but markets predict monetary policy easing in September. According to the CME FedWatch Tool, markets see a 100% probability of a rate cut in September, and a 100% probability of monetary policy easing in November. Non-yielding bullion’s appeal tends to shine in a low-interest-rate environment.
Overall, experts believe that the easing of the Fed's monetary policy, the US elections and the political uncertainty surrounding them, as well as trade tensions between the US and China, could lead to a significant increase in gold prices by the end of this year.