Gold prices are set to end the week lower as the latest batch of data showed that the US economy is still growing strongly, giving the Federal Reserve some room to keep monetary policy restrictive or even raise interest rates further.
On Friday, gold prices edged up to $1,921 an ounce, but they are still down about 1% for the week. The decline in gold prices comes after a strong run in the metal in recent months, as investors sought safe haven assets amid rising inflation and geopolitical uncertainty.
However, the latest data on the US economy suggests that the Fed may not need to take any more aggressive action to cool inflation. On Thursday, the Labor Department reported that initial jobless claims fell to a 16-month low of 235,000 last week, while the ISM non-manufacturing index rose to 54.5 in August, its highest level since April.
These data suggest that the US labor market is still strong and that the economy is growing at a healthy pace. This could make it more difficult for the Fed to justify raising interest rates further, which would weigh on gold prices.
Looking ahead, gold prices are likely to remain under pressure in the near term as the US economy continues to show resilience. However, the metal could find support if inflation continues to rise or if there is a further escalation of geopolitical tensions.
Here are some other factors that could affect gold prices in the coming weeks:
- The outcome of the US midterm elections in November. A Democratic victory could lead to more fiscal stimulus, which could boost inflation and support gold prices.
- The progress of the US-China trade talks. A breakthrough in the talks could boost global growth and reduce demand for gold as a safe haven asset.
- The release of more data on the US economy. Strong economic data could keep gold prices under pressure, while weak data could boost the metal.