Investors Await US GDP and PCE Data as Markets Anticipate Fed Rate Cuts

On Thursday, gold declined to approximately $2,370 per ounce, its lowest level in two weeks, as investors awaited key US economic data. The focus is on preliminary Q2 GDP figures, expected to show 2% growth and the June PCE price index. Market sentiment fully anticipates a rate cut in September, with expectations for two additional reductions by year-end. Increased gold demand from India is also expected following a tax reduction.

The dollar index dropped below 104.3 for the second session as investors awaited crucial US economic data. Key releases include weekly jobless claims and preliminary Q2 GDP figures, followed by the June PCE price index. S&P Global's flash PMIs showed strong services growth but a manufacturing contraction. Market expectations remain tilted towards a 25 basis point rate cut by the Fed in September, with additional reductions likely by year-end.

The Japanese yen strengthened beyond 153 per dollar, its highest in 12 weeks, as traders closed out positions ahead of the BoJ policy meeting. Safe-haven demand also bolstered the yen amid declines in riskier assets due to disappointing corporate earnings and a dimming global economic outlook. Market sentiment is divided on a BoJ rate hike, but there is anticipation of bond purchase tapering. Recent yen strength began with speculation of government intervention, supported by BOJ data indicating significant yen purchases on July 11-12.