Gold price edges lower on Friday amid easing US recession fears and the prevalent risk-on environment. Receding bets for a more aggressive policy easing by the Fed contribute to the modest intraday decline. Geopolitical risks and bets on an imminent start of the Fed’s rate-cutting cycle could lend some support.
Gold struggles to capitalize on the positive move from the previous day and trades with a mild negative bias during the Asian session on Friday. Investors’ confidence is boosted by easing fears of a sharp economic slowdown in the US, leading to a prevalent risk-on environment that undermines demand for the safe-haven precious metal. Nonetheless, the risk of widening conflict in the Middle East and expectations of the Fed’s policy-easing cycle starting soon help limit the downside.
The markets have fully priced in a 25 basis points rate cut at the upcoming FOMC policy meeting in September. This outlook triggers a modest pullback in US Treasury bond yields and does not assist the US Dollar in building on Thursday’s gains inspired by positive US macro data. This situation could further support the Gold price, which remains set to register modest weekly gains. Traders are now looking to the US macro data such as Building Starts, Housing Permits, and the Preliminary Michigan Consumer Sentiment Index for short-term opportunities.
