Gold prices edged lower during Asian trading on Tuesday, snapping a three-day winning streak as investors awaited fresh direction from upcoming United States services sector data.
By 3:15 pm AEST (5:15 am GMT), spot gold was down $4.22, or 0.1%, at US$3,369.45 per ounce, retreating slightly after approaching weekly highs near $3,380 earlier in the session.
The minor pullback followed stronger-than-expected China Caixin Services PMI data, which came in at 52.6 for July, beating forecasts and fuelling risk appetite across broader markets.
Still, gold remains supported by growing expectations of a U.S. Federal Reserve rate cut in September, continued weakness in the U.S. dollar, and ongoing concerns about the Fed’s independence amid political interference.
According to the CME Group FedWatch Tool, markets are now pricing in a 92.1% chance that the Fed will cut interest rates next month, following dovish commentary from San Francisco Fed President Mary Daly and signs of weakening in the U.S. labour market.
The Bureau of Labor Statistics (BLS) reported last Friday that the U.S. economy added 73,000 jobs in July, below the expected 110,000, although an upward revision to June’s data slightly softened the blow.
The unemployment rate ticked higher to 4.2%, in line with expectations.
In a politically charged move, President Donald Trump dismissed BLS Commissioner Erika L. McEntarfer following the weak jobs report, fuelling speculation that the administration may be seeking to exert control over economic data, potentially undermining the Fed’s ability to set policy independently.
This uncertainty has weighed on the U.S. dollar, further lifting demand for non-yielding assets like gold.
Looking ahead, the July ISM Services PMI, due later in the session, is expected to rise to 51.5 from 50.8 in June.
A stronger-than-expected reading could dampen expectations of aggressive Fed easing, pushing the dollar higher and briefly pressuring gold.
