The gold price dipped 1,11% in the past week. Gold prices briefly scaled a 6-year high at $ 1554,800 on Wednesday (04/09), after the US and China officially implemented the new tariff policy, before the gold price finally slipped.
The decline in gold prices was caused by sentiment from the easing of the US-China trade war, after the Chinese side officially confirmed the trade talks. A new round of trade talks between the US and China will be held in Washington DC in October 2019.
Furthermore, the gold price slipped after the Fed President, Jerome Powell issued an optimistic statement related to the outlook for the US economy. Powell also stated that there was no signal of economic recession so market concerns that had previously peaked due to the phenomenon of inverted yield curve were easing.
Nevertheless, the gold price is still moving above the $ 1500 level. Although the sentiments of the trade war are now slightly eased, the uncertainty of the trade war is still vulnerable. Moreover, gold still gained support from the issue of US interest rate cuts at this month's FOMC meeting.
Fed’s Rate Will be on Focus for Gold Prices
Based on CME Fed Funds Futures Rate, for the next 17-18 September Fed Meeting, the Fed is expected to be once again lower its interest rate to 1.75-2.00%. The probability of the move showed by CME is at around 91.2%. For the past weeks, the expectation had already gave support to the gold prices so it hold above $1500 level, with additional support from the release of the non-farm data which showing unfavourable growth last Friday. Will the gold prices stay supported while waiting for the Fed’s move this month?
ECB is Expected to Lower Its Rates
The ECB will meet this week and it is scheduled to meet in Thursday. Based on the last meeting on July, the ECB stated that the rate should be at current level or lower at least through the first half 2020. According to that statement, some people expect the ECB will lower its rate or rolled out new stimulus programme at this week meeting as several data also showed unfavourable released since the last meeting. Any dovish or lower interest rate may give another support to the gold prices this week as it push the risk aversion sentiment and it drives concern on global economy risk.