Gold prices extended losses in Asian trade on Thursday, slipping further below US$3,200 per ounce and trading at five-week lows as investors awaited upcoming data from the United States and a speech from Federal Reserve Chair Jerome Powell.
Spot gold fell $41.64, or 1.3%, to $3,135.10 per ounce at 3:30 pm AEST (5:30 am GMT), deepening the previous day’s 2.2% decline.
The yellow metal hovered near monthly lows as traders remained cautious ahead of the release of U.S. producer price index (PPI) and retail sales figures.
Meanwhile, market pricing currently reflects expectations of around 53 basis points of Fed rate cuts in 2025, with the probability of a 25 basis point reduction in September standing near 50%, according to the CME Group FedWatch Tool.
Despite a slight cooling in the U.S. consumer price index (CPI) - 2.3% annually in April compared to forecasts of 2.4% - rising odds of fewer rate cuts have weighed on the non-yielding gold price.
The gold market is also under pressure from easing recession concerns, fuelled by improved global trade relations. A trade truce between the U.S. and China, along with optimism over U.S.-South Korea talks and progress on a potential U.S.-Iran nuclear deal, have further dented demand for safe-haven assets like gold.
However, some analysts maintain a constructive outlook for gold in the medium term. ANZ analysts noted: “Nevertheless, the backdrop for gold remains supportive. China’s affinity for gold continues to strengthen, with a shift from physical to investment demand amid the challenging geopolitical backdrop. Trading volumes on Chinese exchanges surge, while inflows in gold-backed ETFs remain strong. This has pushed the onshore premium to US$50/oz in recent weeks.”
