Gold prices fell slightly on Wednesday as the US dollar strengthened, in the context of investors being cautious and not making major moves before US President Donald Trump announced the appointment decisions at the Federal Reserve (FED).
At 6:31 a.m. GMT, spot gold fell 0.1% to $3,376.69 an ounce, after hitting a nearly two-week high on Tuesday. US gold futures also fell 0.1%, to $3,432.4/ounce.
Gold has previously recovered from a weekly low in the previous session, after weak US employment data increased expectations of the Fed cutting interest rates in September - a factor that reduces the attractiveness of gold to investors holding other currencies.
Gold is stuck between opposite forces. Lower bond yields are a supporting factor, but the USD remains strong despite being sold off on Friday. This creates the current range of fluctuations, as the market awaits more clear momentum, said Mr. Ilya Spivak, Head of Global Macro at Tastylive.
US President Donald Trump said on Tuesday he would soon announce a temporary replacement for Fed Governor Adriana Kugler, who announced his resignation on Friday, as well as nominate him for the Fed Chairman for the next term.
The CME FedWatch tool now shows that the probability of the Fed cutting interest rates in September has increased to nearly 88%, after weaker-than-expected employment data on Friday.
Regarding trade, Mr. Donald Trump once again mentioned the possibility of imposing higher tariffs on goods from India because the country continues to buy oil from Russia. New Delhi called the statement "unreasonable" and affirmed that it would protect national economic interests, increasing trade tensions between the two countries.
In other developments, Perth mint's gold product sales in July fell 33% compared to the previous month, while silver sales fell to a six-month low according to the refiner's announcement on Wednesday.
Many experts at leading financial institutions in Wall Street are warning investors to prepare for an adjustment when stock valuations are currently too high while economic data is getting worse.
Morgan Stanley, Deutsche Bank AG and Evercore ISI all see the S&P 500 index expected to fall in the next few weeks or months. These forecasts were made after a series of strong increases in the stock market from the bottom in April, pushing the index to a record high last week.
Morgan Stanleys Mike Wilson predicts a 10% correction in the market this quarter. Evercore's Julian Emanuel expects the decline to be deeper, up to 15%. The German bank's analysis team, led by Parag Thatte, said the stock market is "borrowing" a small decline. History shows that September and October are often the period of strong fluctuations in the stock market.
Technically, December gold futures bulls are still in the short term. The next upside target for buyers is to close above the strong resistance level at the July peak of 3,509 USD/ounce.
In contrast, the nearest downside target for the bears is to pull prices below the strong technical support level at $3,300/ounce. The first resistance level was determined at 3,450 USD/ounce, then 3,475 USD/ounce. First support is at the bottom of this week: $3,397.9/ounce, followed by $3,350/ounce.
Spot silver prices moved sideways at 37.85 USD/ounce. platinum fell 0.1% to $1,319,35/ounce and gold lost 0.6%, to $1,168.17/ounce.
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