Gold falls over 1% as investors take profits, attention shifts to US data; silver plunges 5%

Gold dropped more than 1 per cent on Thursday, reaching its lowest point in two weeks, as investors adjusted their positions to concentrate on upcoming U.S. economic data that might provide further clues on when the Federal Reserve could cut interest rates.

By 1302 GMT, spot gold had decreased by 1.2 per cent to $2,369.29 per ounce, hitting its lowest level since July 10. Meanwhile, U.S. gold futures declined by 1.9 per cent to $2,368.80.

“Gold prices witnessed a major setback due to pressure from Comex, as Comex Gold fell below $2,375, down from $2,409. Consequently, MCX Gold saw a sharp correction of ₹1,100, settling at ₹67,850. The pressure is attributed to ongoing profit booking, as the anticipated September rate cut had been priced in. However, there is a high possibility that it could be a one-time cut before a pause, especially with the upcoming US elections in November 2024. Gold will now take cues from the Fed's policy review on 31st July, ” said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

What's weighing on gold prices?

Stock markets experienced a multi-trillion-dollar decline on Thursday due to a drop in global tech stocks.

Investors are awaiting the personal consumption expenditure (PCE) data on Friday to adjust their expectations for the timing of Fed rate cuts. The CME FedWatch Tool indicates a 100% chance of a rate cut in September. Bullion, which does not yield interest, is typically more attractive in a low-interest-rate environment.

"Gold/ Silver prices are trading lower tracking broad selling across global financial markets, triggered by a sharp appreciation in the Japanese yen on rising bets of a rate hike by the BoJ at its meeting next week, whereas other central banks are looking for rate cuts. Prices now are stuck in a range as we look ahead to U.S data on GDP and PCE inflation.

Some chart based selling too was seen in the bullion's after key supports were breached in gold at $2,380 in the overseas market, with next level now seen around $2,349 and $29.5 in Silver," said Pranav Mer, VP - Research (Commodity & Currency) BlinkX and JM Financial.

Spot silver fell by 4.8% to $27.6 per ounce, reaching an 11-week low. Platinum decreased by 1.5% to $933.68, near a three-month low, and palladium dropped by 2.9% to $905.32.