Gold Futures Hover Below $2400 as Markets Await Key Economic Data

Gold futures experienced a modest decline on Monday, with the August contract settling just below the significant $2400 per ounce mark. As of 5:15 PM ET, August futures were fixed at $2394.70, down $4.40 from the previous close. The precious metal opened at $2403.70 and reached an intraday high of $2414.14 before retreating.

Market participants are processing the unexpected announcement by President Biden to withdraw from the presidential race. The initial reaction was subdued, with gold briefly touching its daily high before drifting lower to $2385.20 and subsequently recovering slightly.

Jeffrey Christian, managing partner of CPM Group, noted, "We're seeing a quiet market today for gold as they're waiting to see what exactly the change in the democratic party's candidacy means for the election and for the country and the world overall."

Rhona O'Connell, a StoneX analyst, commented on the potential long-term implications, suggesting that a Trump presidency could be more favorable for gold due to inflationary pressures and geopolitical tensions. However, she emphasized that it's premature to take strategic positions at this stage.

Attention is now shifting to crucial economic reports scheduled for release later this week. Thursday will see the publication of the U.S. gross domestic product data for the second quarter, followed by the Personal Consumption Expenditures (PCE) report on Friday. The PCE report is particularly significant as it provides the most current inflation data available to Federal Reserve officials ahead of their July 31 FOMC meeting.

According to MarketWatch, consensus estimates suggest that inflation rose at a 2.5% annualized rate last month, down from 2.6% in May. This data is likely to reinforce expectations that the Federal Reserve will maintain its current benchmark rate at the upcoming meeting, with only a 2.6% probability of a rate cut.

Looking ahead to September, the likelihood of a rate cut remains high. The CME's FedWatch tool indicates a 91.2% probability of a quarter-point rate cut, with only a 5.8% chance of rates remaining unchanged and a 2.4% possibility of a half-point cut.

As traders await these critical economic indicators, gold prices are expected to remain sensitive to shifts in monetary policy expectations and political developments. The precious metal continues to be viewed as a safe-haven asset, particularly in times of economic uncertainty and political transitions.

Wishing you as always good trading,