Gold closes up at $4,377 per ounce at the end of last week's trading
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.
A report issued on Sunday by Kuwait Mint Company stated that 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, coming in 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 both consumer and producer price indices were milder than expected, supporting expectations that the Federal Reserve might 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, down from approximately 55 percent a week earlier, a positive factor for gold amid the lower opportunity cost of holding the precious metal.
It mentioned that the US dollar weakened during the week as investors scaled back their bets on tighter US monetary policy, while lower 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, up 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 affecting markets. It clarified that despite the continued closure of the strait, oil prices did not surge sharply, which helped limit fears of a strong new wave of inflation.
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’s meeting, which featured three dissents, potentially offering important signals regarding the future path of interest rates and monetary policy direction in the coming months, as well as the minutes of the European Central Bank’s 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.
The report mentioned that PMI indicators will also be released for the eurozone, Japan, Australia, India, and the United Kingdom, while the UK and Canada will publish inflation and retail sales data.
It pointed out that European markets are awaiting investor confidence indicators for 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.
He added that China would release data on industrial production, retail sales, and housing prices, alongside anticipation of labor market data from Australia, the United Kingdom, and Canada, as well as the Swedish Riksbank’s decision on interest rates.
The “Dar Al Sibaak” report confirmed that gold’s movements in the coming period would remain primarily linked to the dollar’s trajectory, expectations for U.S. interest rates, and geopolitical developments in the Middle East.
It clarified that if weak economic data persist and rate-hike expectations recede, gold could receive additional support and attempt to break above the $4,400-per-ounce level, targeting $4,450. Conversely, a stronger dollar or renewed inflation concerns could trigger profit-taking and downward pressure on prices.
The report stated that the $4,300–$4,400 range would remain pivotal in determining gold’s direction in the near term, as markets await economic data, the Federal Reserve’s meeting minutes, and developments related to Iran and the Strait of Hormuz.
According to the “Dar Al Sibaak” report, 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 momentum. Meanwhile, U.S. economic data and geopolitical developments will remain the primary drivers of prices.
On the local front, he noted 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 4.3 Kuwaiti dinars (about $141), while a gram of 22-karat gold stood at around 3.97 Kuwaiti dinars (approximately $130). Meanwhile, the price of a kilogram of silver reached about 727 Kuwaiti dinars (roughly $2,366).
