Rua Gold Inc. (CSE: RUA, OTC: NZAUF)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
A week after hitting a historic high, the price of gold was pressured by profit-taking and fell this week. As of 11:20 AM Eastern Time, spot gold was trading at 2506.59 perounce, down 0.6%, while December Gold Futures fell to 2538.30 per ounce, down 0.9%.
It is obvious that cautious sentiment has emerged in the gold market this week. The Personal Consumption Expenditures (PCE) price index, released on Friday, showed a 0.2% increase last month, in line with economists’ forecasts. With non-farm payroll data set to be released next Friday, most analysts believe that gold’s volatility may increase next week, although the likelihood of gold reaching new highs before the September rate cut is diminishing.
In the physical gold market, the rebound in prices has dampened purchasing power, leading to the widening of discounts for Indian gold prices to their highest level in six weeks. Additionally, new import quotas have failed to boost gold demand in China.
Matt Simpson, Market Analyst at CityIndex, noted that many investors are still on the sidelines. He stated: “We have witnessed two months of heavy USD selling, and bond yields remain above their August 2 low, set at the last Nonfarm payrolls report. This suggests that the USD may be oversold in the near term. Therefore, it may not require much of an surprise from next week’s ISM or employment figures to trigger further USD short covering and a pullback in gold.”
Han Tan, Chief Market Analyst at Exinity, pointed out that the price of gold is constrained by doubts about whether the Federal Reserve can achieve the market forecasted 100 basis point rate cut by the end of 2024. Despite trading near historic highs, gold bulls are currently hesitant about further upside potential.
According to the CME FedWatch Tool, the market fully expects a 25 basis point reduction in interest rates at the September monetary policy meeting, with a 30.5% chance of a 50 basis point rate cut.
Analysts believe that if the unemployment rate eases to 4.2%, alleviating some recession fears, spot gold may fall below $2,500, as the possibility of a 50-basis point rate cut diminishes.
Phillip Streible, Chief Market Strategist at Blue Line Futures, also expressed a cautious sentiment about gold. He pointed out that any decline in gold could be a buying opportunity, but investors should carefully and incrementally build their positions, rather than making large purchases.
Analysts have noted that September has typically been a month of declining gold prices over the past 15 years. Additionally, the Bank of Canada will hold its monetary policy meeting next week, with markets expecting a high probability of further rate cuts due to inflation and a weakened Canadian economy.
