Ultima Markets

Gold prices continued their downward trend on Thursday, trading at $2,370 per ounce and marking a two-week low. The decline came in response to economic data released by the Bureau of Economic Analysis (BEA), indicating the U.S. economy’s resilience despite the current restrictive monetary policy. 

U.S. Gross Domestic Product (GDP) showed impressive growth, expanding at an annualized rate of 2.8% in the second quarter. The figure significantly surpassed market expectations of 2% and represented an acceleration from the previous quarter’s 1.4% growth. Such robust economic performance suggests that the U.S. economy is weathering the high-interest rate environment better than anticipated. 

However, underlying inflation indicators remain stubbornly above the Federal Reserve’s target. Persistent inflationary pressure may constrain the central bank’s ability to implement substantial rate cuts in the upcoming monetary easing cycle. 

Despite these economic signals, financial markets continue to anticipate a shift in monetary policy. They are fully pricing in for a rate cut by the Federal Reserve in September, with expectations of two additional reductions before the year’s end. The market sentiment persists even as strong economic data might justify a more cautious approach to interest rate adjustments. 

In a separate development that could impact gold prices, expectations of increased physical demand from India, the world’s second-largest gold consumer, have emerged. The anticipated surge in demand follows the Indian government’s decision to reduce its gold import tax from 15% to 6%, potentially making gold more affordable in the Indian market. 

(Gold Price Monthly Chart) 

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