Additionally, profit-taking following a 6.5% rise added to the decline. However, cautious market sentiment and rising geopolitical tensions may limit losses, which may support gold prices.
A stronger dollar and rising jobless claims weigh on gold prices
The U.S. dollar rose and pushed gold prices lower for the third consecutive day, despite market expectations that the Federal Reserve will cut interest rates in September. The latest report from the U.S. Bureau of Labor Statistics showed that initial jobless claims increased to 243,000, the highest four-week average in two and a half years, indicating a weakening job market.
This, combined with falling inflation, suggests the Fed may begin cutting interest rates. Meanwhile, positive U.S. manufacturing data and market forecasts point to a 100% chance of a rate cut in September, with two more rate cuts expected by the end of the year.
Despite positive manufacturing data, a stronger U.S. dollar and rising jobless claims, coupled with expectations of a rate cut from the Federal Reserve, sent gold prices lower for three days in a row.
Geopolitical tensions and strong dollar impact gold prices
Former President Trump's comments about Taiwan paying U.S. defense costs have cast doubt on the U.S.'s commitment to defending Taiwan against potential attacks from China.
This uncertainty, coupled with ongoing conflict in the Middle East and the protracted Russia-Ukraine war, is likely to support gold prices (XAU/USD).
