These developments have renewed fears of a broader trade conflict, prompting a defensive rotation into gold and silver.
Weak US Data Sharpens Focus on Fed Easing
Disappointing macroeconomic data has added fuel to the rally. The ISM Services PMI slipped to a multi-month low this week, while the US Nonfarm Payrolls report came in below expectations for the second consecutive month. These trends have amplified market confidence in an imminent shift in monetary policy.
According to CME’s FedWatch Tool, futures markets now price in a 90.5% probability of a 25-basis-point cut in September. Traders are also factoring in at least two rate reductions before year-end, reflecting a broader belief that the Fed will act preemptively to support growth.
“The data is softening, and the Fed can’t afford to fall behind the curve,” said Charles Meyer, macro strategist at Wellspoint Capital. “Precious metals are reflecting that recalibration in real time.”
Dollar Stability Caps Gains but Outlook Remains Bullish
While the US Dollar staged a modest recovery from weekly lows, its limited rebound has not derailed the bullish case for metals. The inverse relationship between gold and the dollar remains intact, with non-yielding assets like gold and silver benefiting from reduced interest rate expectations.
Investors now turn their attention to upcoming US initial jobless claims and remarks from Federal Open Market Committee (FOMC) members for further clarity on the Fed’s trajectory. Until then, macro uncertainty and policy shifts are likely to keep safe-haven demand elevated.