• Stronger USD pressures gold prices
• Investors expect multiple rate cuts
• Geopolitical issues may support gold
• Oil prices drop amid stronger USD, demand concerns

Gold (XAUUSD)

Gold continues to ease after setting another record last Wednesday, July 17, when it briefly hit $2483.76 an ounce.

However, the XAUUSD may close in the red today, pressured by the rise in the U.S. dollar.

The USD index jumped ~0.42% yesterday, July 18th, despite the recent rise in initial jobless claims (243K – actual vs. 230K – expected) and last week's lower-than-expected CPI.

Investors are now pricing in a 99.3% chance of a rate cut in September (according to the FedWatch Tool), with the potential for 2-3 more cuts by year-end.

Lower interest rates may be beneficial for the zero-yielding Gold.

Ongoing turbulence on the global geopolitical stage, along with uncertainties about future US policies, may provide some support to the yellow metal.

Oil (Brent)

Oil may also close lower today, possibly heading for a second weekly loss, amid a stronger U.S. dollar and macroeconomic data.

At the time of writing, Brent was already down ~0.66%.

A stronger US dollar tends to translate into lower Brent as oil becomes more expensive in other currencies.
The drop in oil prices comes amid growing uncertainty about the economic outlook for one of the world's largest oil consumers - China.

The Chinese economy grew less than expected in the second quarter (4.7% actual vs.

5.1% expected), raising concerns about the country's future oil demand.

However, the EIA reported an unexpected drop in crude oil inventories (-4.87M – actual vs. 0.8M – expected) - a third consecutive week of declines and the longest streak of inventory drawdowns since September 2024.
 

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