The continued declines in gold come with the recovery of the dollar, despite the continued high sentiment about the possibility of an interest rate cut in September, in addition to the underlying geopolitical factors, especially from the Middle East, which are preparing to ignite in light of a number of recent developments.
While the probability of the Fed reducing interest rates starting next September is still very high and amounts to more than 90%, according to the CME FedWatch Tool.
The underlying upside risks to inflation come from concerns about structural changes in policies in the US with the potential return of Donald Trump to the White House. This likely return of Trump would lead to inflation rising again with lower taxes and a massive increase in customs tariffs on imported goods, especially from China.
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