Gold ends the week at $4,377 per ounce, supported by the decline of the US dollar

Gold prices ended last week’s trading session higher at $4,377 per ounce, marking a second consecutive weekly gain supported by a decline in the US dollar and reduced expectations for an interest rate hike by the US Federal Reserve (the central bank) at its upcoming September meeting.

According to a report issued on Sunday by Kuwaiti Mint Company, gold’s rise followed a series of weak US economic data that bolstered expectations of an economic slowdown and eased the likelihood of tighter monetary policy.

The report clarified that US retail sales fell by 0.6 percent in July, recording the first decline after five consecutive months of growth. The result was worse than market expectations, which had pointed to a 0.1 percent increase.

It added that US inflation data during the week showed continued easing of inflationary pressures, as consumer price and producer price indices came in more moderate, supporting expectations that the Federal Reserve may not proceed with an interest rate hike in September.

The report noted that the probability of a September rate hike dropped to around 31 percent, compared to approximately 55 percent a week earlier, which acted as a positive factor for gold amid lower opportunity costs of holding the precious metal.

It stated that the US dollar weakened during the week as investors scaled back their bets on tighter US monetary policy, while declining yields on US Treasury bonds provided additional support for gold prices.

It highlighted that the preliminary reading of the US Consumer Confidence Index fell from 55 points in July to 51 points in August, reflecting growing concerns about the strength of the economy and consumers’ ability to withstand rising prices.

It pointed out that one-year inflation expectations rose to 4.3 percent from 4.2 percent, while long-term expectations remained steady at 3.3 percent.

On the geopolitical front, the report stated that developments in the Middle East and the fate of the Strait of Hormuz remained among the most influential factors in the markets. It clarified that despite the continued closure of the strait, oil prices did not experience a sharp rise, which limited concerns about a return of strong inflationary waves.

It noted that demand from central banks continues to provide fundamental support for gold, with China adding approximately 20 tons to its precious metal reserves in July, marking the 21st consecutive month of purchases.

It explained that investors’ attention this week is focused on the minutes of the US Federal Reserve meeting, which featured three dissenting votes, which may provide important signals regarding the future path of interest rates and the direction of monetary policy in the coming months, in addition to the minutes of the European Central Bank meeting.

It added that markets are awaiting US economic data including initial manufacturing and services purchasing managers’ indices (PMIs), housing indicators, building permits, trade conditions, and industrial production, alongside a range of other data that may help assess the strength of the US economy.

It mentioned that European markets are watching investor confidence indicators in the eurozone and Germany, while attention in Japan is directed toward second-quarter gross domestic product (GDP) data, the trade balance, and the inflation rate.

It clarified that if weak economic data persist and expectations for a rate hike continue to fall, gold may receive additional support and attempt to surpass the $4,400 per ounce level, then target $4,450 per ounce. Conversely, a stronger US dollar or renewed inflation concerns could trigger profit-taking and pressure on prices.

The report stated that the $4,300–$4,400 range will remain pivotal in determining gold’s direction in the coming phase, as markets await economic data, the Federal Reserve meeting minutes, and developments related to Iran and the Strait of Hormuz.

Dar Al-Suqayk’s report noted that gold enters the new week supported by relatively positive fundamentals, but its ability to surpass the $4,400 level will be a key technical factor in determining whether it can continue its upward trajectory. Meanwhile, U.S. economic data and geopolitical developments will remain the primary drivers of prices.

On the local front, the report pointed out that gains achieved by precious metals in global markets were reflected in Kuwaiti market prices. The price of a gram of 24-karat gold reached approximately 43.6 Kuwaiti dinars (about $141), while a gram of 22-karat gold recorded around 39.97 Kuwaiti dinars (approximately $130). Meanwhile, the price of a kilogram of silver stood at about 727 Kuwaiti dinars (roughly $2,366).