The price of gold corrected downward after reaching two-week highs, yielding to pressure from a strengthening U.S. dollar. In the spot market, the precious metal lost 0.58%, falling to $4,141.26 per troy ounce.
The key catalyst for the decline was the rise in the U.S. Dollar Index (DXY), which gained 0.3% on Tuesday. This made gold less affordable for foreign buyers, triggering profit-taking after the recent rally. However, the scale of the drop was limited — the market factored in revised U.S. employment data, which showed a slowdown in job growth in June.
Weak macroeconomic data significantly reduced the likelihood of a tightening of Federal Reserve monetary policy. According to the CME FedWatch tool, traders estimate the chances of a rate cut in September at around 56%. Market participants are now focused on the Fed's meeting minutes, scheduled for release on Wednesday. This document could set the short-term direction for gold.
JPMorgan Revised Targets but Maintains Long-Term Optimism
JPMorgan analysts still expect prices to rise to $4,500 by the end of the fourth quarter. This scenario remains relevant despite the recent adjustment of targets. Recall that on June 9, the bank forecasted reaching $6,000 by year-end, but in July it lowered the target by about a quarter.
The reason for the revision is a drop in demand from key economic sectors. JPMorgan analysts warned that risks are skewed to the downside if inflation accelerates again in the summer. Nevertheless, the bank maintains a positive long-term outlook for the metals market at least until 2027, based on continued active purchases by central banks.
In addition to gold, JPMorgan expects an average silver price in the range of $60–65 per ounce, a gradual rise in platinum, and a moderate decline in palladium through 2027.
My expertise: The correction in gold amid a stronger dollar is a temporary phenomenon. Fundamental drivers, such as central bank purchases and expectations of Fed policy easing, remain in place. The Fed meeting minutes this week will be a key trigger: if they confirm a dovish stance, we could see a resumption of the rally in the coming days.