Gold prices retreated to approximately $3,380 per ounce on Thursday after hitting a two-week high, as investors awaited new policy cues ahead of the release of the Personal Consumption Expenditures (PCE) price index on Friday, a key inflation indicator favored by the Federal Reserve. Despite this pullback, gold prices remained near historical highs, buoyed by ongoing political and institutional tensions between the U.S. administration and the Federal Reserve. This tension was exemplified by President Trump's recent attempt to dismiss Federal Reserve Governor Lisa Cook, which her legal counsel has pledged to contest in court, setting the stage for a significant legal confrontation.
Market participants have also increased their expectations for Federal Reserve interest rate cuts, with the probability of a 25 basis points reduction in September rising to 89%, up from 82% the previous week. Contributing to this dovish outlook, New York Fed President John Williams indicated that a rate cut was under consideration, mirroring comments made by Federal Reserve Chair Jerome Powell at the Jackson Hole symposium.
Furthermore, demand from Asia remained strong, exemplified by China's net gold imports through Hong Kong, which increased by an impressive 126.8% in July compared to June, more than doubling on a month-to-month basis.
