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Gold drops as investors await further U.S. data


Spot gold was 0.5 per cent lower at $2,321.11 per ounce, after increasing more than 1 per cent on Friday

Gold prices dropped on Monday as investors await further U.S. economic data, while reports from last week showed that inflation was stabilising, raising expectations that the Fed will reduce interest rates later this year.

Spot gold was 0.5 per cent lower at $2,321.11 per ounce, as of 0546 GMT, after increasing more than 1 per cent on Friday. U.S. gold futures dropped 0.6 per cent to $2,335.30.

Today’s small move is probably just a little bit of an unwind of the move that we saw on Friday, stated Kyle Rodda, a financial market analyst at, adding that in the long run fundamentals are very constructive for gold, but are data-dependent.

U.S. retail sales data is due on Tuesday, weekly jobless claims on Thursday and flash PMIs on Friday. Several Federal Reserve officials are also scheduled to speak this week.

With some signs of weakness emerging in the U.S. economy, which could weaken the U.S. dollar and also increase expectations of rate cuts going forward, gold is in a great position to take advantage, Rodda said.

Data released last week showed some weakening in price pressures in the U.S., suggesting that the labor market was losing momentum, keeping hopes alive for a September rate cut.

Traders are seeing a 68 per cent chance of a cut in September, as per the CME Group’s FedWatch Tool, compared to 63 per cent before the producer prices data on Thursday.

Nevertheless, Minneapolis Fed President Neel Kashkari on Sunday said it’s a “reasonable prediction” that the U.S. central bank will cut interest rates once this year, waiting until December to do it.

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