FX.co ★ Gold Extends Pullback

On Thursday, gold prices declined to $3,320 per ounce, negating the modest gains achieved in the previous session. This shift came as evidence of a robust US economy reduced the pressure on the Federal Reserve to lower interest rates. Notably, headline and core retail sales exceeded expectations in June, and initial unemployment claims dropped for the fifth consecutive week, reaching a three-month low. Such strong economic data strengthened expectations that the Federal Reserve would maintain current interest rates this month. This view aligns with statements from the more hawkish members of the Federal Open Market Committee (FOMC), who, in their latest Summary of Economic Projections (SEP), indicated an absence of rate cuts this year. However, increasing reports about the White House potentially planning to dismiss Fed Chair Jerome Powell heightened the demand for safe-haven assets. Uncertainty surrounding US economic policy persisted, hampering a rebound of the US dollar. As a result, central banks opted to boost their gold reserves instead of investing in the traditional Treasury securities. According to surveys, central banks collectively increased their gold holdings by a net 20 tonnes in May, with notable contributions from Kazakhstan, Turkey, Poland, and Singapore.