Sending a Signal: Gold Prices Stagnate Despite Recession Fears and Fed Speculations

The prices of the safe investment asset gold remained unchanged on Monday. Profit-taking losses counteracted the support factors, such as fears of a US recession and growing expectations of an interest rate cut in September by the Federal Reserve. The spot gold price stabilized at $2,443.44 per ounce after previously falling by 1%. However, US gold futures rose by 0.7% to $2,485.80. "There is some profit-taking as traders try to gauge how aggressive the Fed will be regarding the rate cut in September," explained Tim Waterer, Chief Market Analyst at KCM Trade. Equally, the fundamental picture points to further gains for gold, given the expectations of a dovish US monetary policy. Data released on Friday showed that US job growth lagged behind expectations in July, and the unemployment rate rose to 4.3%. This indicates potential weaknesses in the labor market and a greater susceptibility to a recession, increasing the likelihood of an interest rate cut at the Fed meeting on September 17-18. Traders now estimate a more than 70% chance that the US central bank will cut rates by 50 basis points in September, compared to an 11.5% chance the previous week, according to the CME FedWatch Tool. Lower interest rates reduce the opportunity costs of holding non-yielding bullion. Richmond Federal Reserve President Thomas Barkin expressed caution on Friday, stating that he was not yet ready to adjust his monetary policy. Investors are also keeping an eye on the final July data for S&P Global Services and ISM Non-Manufacturing PMI, which will be released later in the day. Elsewhere, the Pentagon announced on Friday that it is deploying additional fighter jets and naval warships to the Middle East to bolster defense against threats from Iran and its allies, Hamas and Hezbollah. The spot price for silver remained unchanged at $28.52 per ounce, platinum fell by 0.5% to $953.25, and palladium remained nearly unchanged at $889.98.