On Friday morning (July 26th) in the Asian market, spot gold was hovering at a low level, currently trading around $2364.42 per ounce. On Thursday, gold prices fell more than $30, briefly falling below the key position of the 55 day moving average of $2360.70 during trading. The lowest point reached $2353 per ounce, closing at $2364.39 per ounce. On the one hand, some bulls took profits after the recent rise, and on the other hand, the US GDP growth rate in the second quarter rebounded and was stronger than market expectations, reflecting that the US economy is much stronger than people realize. This provides support for the US dollar and US Treasury yields, putting significant pressure on gold prices.

The gold price has fallen by over 1.6% (nearly $40) this week, and investors will focus on the US June PCE data released in the evening. If the data reinforces expectations of a slowdown in inflation growth, it may provide a short-term rebound opportunity for the gold price; But if the data meets expectations or is unexpectedly strong, the gold price will face further downside risks.

Marex analyst Edward Meir said, "There must have been some profit taking, which was triggered by the weakness of the US stock market, and this is not just a sell-off

Due to the growing optimism in the market about the Fed's September interest rate cut, gold hit a historic high of $2483.60 last week.

According to the CME FedWatch tool, the market believes that there is a 100% chance of a rate cut in September. In a low interest rate environment, the attractiveness of non yielding gold is often amplified.

The decline in US Treasury yields narrowed at the beginning of the release of Gross Domestic Product (GDP) data by the US Department of Commerce. The data shows that the year-on-year growth rate of GDP in the second quarter of the United States was 2.8%, higher than the 2.0% predicted by economists and stronger than the 1.4% in the first quarter. In addition, the data also shows that inflationary pressures have eased, providing space for the Federal Reserve to cut interest rates this year as widely expected by the market.

The market is ahead of schedule on the issue of the Federal Reserve cutting interest rates, "said Marc Chandler, Chief Market Strategist at Bannockburn Forex in New York." Prior to the release of GDP data, the market's pricing was that the Federal Reserve seemed to be cutting by 50 basis points in September

He also cited comments made by former New York Fed President Dudley in a Bloomberg column on Wednesday, stating that the Fed should cut interest rates next week and citing recent employment data.

Chandler said, "The GDP data indicates that the Federal Reserve does not have that sense of urgency

Jay Hatfield, CEO of Infrastructure Capital Advisors, said, "The bond market has shown considerable resilience because today's GDP data is good. We are preparing for the blonde economy, and we are concerned that the real estate industry may really turn around, which could lead to GDP falling to at least zero, but it doesn't seem to happen. The Federal Reserve will eventually cut interest rates, although it's a bit late, it will still fall

Traders are now waiting for the release of US personal consumption expenditure (PCE) data on Friday, which is the Federal Reserve's preferred inflation indicator. The market expects PCE to increase by 2.4% year-on-year and 0.1% month on month in June, with core PCE increasing by 2.5% year-on-year and 0.1% month on month

As the preferred inflation indicator of the Federal Reserve, PCE remained unchanged in May compared to the previous month, with a year-on-year increase of 2.6%. Excluding volatile food and energy, core PCE increased by 0.1% month on month and 2.6% year-on-year

Bob Schwartz, Senior Economist at Oxford Economics, stated that if the upcoming PCE is better than expected, the Federal Reserve will officially put discussions on policy shifts on the agenda. However, he believes that this will not change the path of the Federal Reserve's data dependence, and further interest rate cuts in the future will still depend on the performance of economic data. The data may fluctuate in the future, and a policy test for the Federal Reserve is about to come

Stephen Stanley, Chief Economist of Santander Capital Markets, is concerned that recent inflation reports may exaggerate the pace of inflation slowdown. The prices of some goods and services have experienced unusual declines. He believes that this situation will not last long, and the Federal Reserve may experience another unwelcome data surprise, delaying the window for the first rate cut until November or later.

In addition, investors need to continue to pay attention to relevant news such as the US election and geopolitical situation.

The US economy grew faster than expected in the second quarter, and price pressures have eased to some extent

The US economy grew faster than expected in the second quarter, as consumer spending and business investment steadily increased, but inflationary pressures weakened, keeping the expectation of the Federal Reserve cutting interest rates in September unchanged.

The initial value of the second quarter gross domestic product (GDP) released by the US Department of Commerce on Thursday showed that the increase in inventory and government spending boosted economic growth in the second quarter. However, the recovery process of the real estate market has regressed, causing a slight drag on the economy. The trade deficit has further widened, dragging down GDP growth.

This report eliminates people's concerns about the possibility of a sudden halt to economic expansion, which were exacerbated by the sluggish performance in the first quarter and April.

Despite significant interest rate hikes by the Federal Reserve in 2022 and 2023, the US economy still outperforms other countries thanks to the resilience of the labor market.

Economic growth is steady, but neither hot nor cold, "said Christopher Rupkey, Chief Economist at FWDBONDS." Inflation seems to be moving in the direction the Federal Reserve hopes for, and there is a possibility of easing monetary restrictions through interest rate cuts in September

The Bureau of Economic Analysis stated in its Q2 GDP preliminary report that the year-on-year growth rate of GDP was 2.8%, which is twice as high as the 1.4% growth rate in the first quarter. The surveyed economists previously predicted a GDP growth rate of 2.0%, with forecast values ranging from 1.1% to 3.4%.

The average growth rate of the United States in the first half of this year was 2.1%, which is half of the 4.2% growth rate in the last six months of 2023. This is slightly higher than the 1.8% growth rate that Federal Reserve officials believe does not stimulate inflation.

After slowing down to 1.5% in the first quarter, consumer spending, which accounts for over two-thirds of the total economy, grew at a rate of approximately 2.3% in the second quarter. The growth in consumption is aided by an increase in service expenditures, including healthcare, housing, and utilities, as well as expenses for club memberships, visits to sports centers, parks, theaters, museums, and gambling.

Consumers have also increased their spending on goods, including purchasing new light trucks, entertainment products and vehicles, furniture, durable household equipment, and energy products.

Wage growth has to some extent supported consumption. Another report released by the Department of Labor on Thursday showed a steady slowdown in the labor market, with the number of first-time applicants for state unemployment benefits decreasing by 10000 in the week ending July 20, to 235000 seasonally adjusted.

Enterprise investment has rebounded, and equipment (mainly aircraft) expenditures have surged at a rate of 11.6%, with only a 1.6% increase in the first quarter. The expenditure on intellectual property products continues to rise, although it has slowed down compared to the rapid growth in the first quarter.

The company also accumulated more inventory, with an increase of $71.3 billion in inventory, compared to only $28.6 billion in the first quarter.

After dragging down GDP growth for two consecutive quarters, inventory contributed 0.82 percentage points to GDP growth in the second quarter. This offset the drag of 0.72 percentage points caused by the widening trade deficit.

Even without considering inventory, trade, and government spending, US growth in the second quarter was robust, with domestic demand growing at a rate of 2.6%. The final sales growth rate for domestic consumers is comparable to the growth rate in the first quarter.

Chris Zaccarelli, Chief Investment Officer of Independent Advisor Alliance, said, "The US economy is much stronger than people realize, and given market concerns about slowing growth, they should breathe a sigh of relief

The acceleration of GDP growth indicates an increase in labor productivity, which will slow down the growth rate of labor costs and ultimately alleviate price pressures. The core personal consumption expenditure (PCE) price index, excluding volatile food and energy, grew at an annual rate of 2.9% in the second quarter compared to the previous quarter, with a surge of 3.7% in the first quarter.

Although the growth rate of the core PCE price index is slightly higher than economists' expectations of 2.7%, the trend is slowing down. The core inflation rate increased by 2.7% year-on-year, which is a welcome news for policymakers before the two-day policy meeting starting next week.

The core PCE price index is one of the inflation indicators tracked by the Federal Reserve to achieve its 2% target.

The most widely used indicator by the government to measure prices in the economy, the Gross Domestic Product (GDP) price index, increased by 2.3% in the second quarter and 3.1% in the first quarter.

Over the past year, the Federal Reserve has maintained its target range for overnight interest rates at the current 5.25% -5.50%. Since 2022, the Federal Reserve has raised its policy rate by 525 basis points. The financial market expects three interest rate cuts this year, starting from September.

Despite the steady pace of economic growth, the outlook for the second half of this year is not clear. The labor market is slowing down, which will affect wage growth.

Although wages have increased, after deducting inflation and tax factors in the second quarter, the growth of household disposable income has been slower, increasing by only 1.0% in the previous quarter after a 1.3% increase in the first quarter.

This means that consumers will use their savings in the second quarter, while also reducing their savings for expenses. The savings rate has dropped from 3.8% in the first quarter to 3.5%, currently far below the pre pandemic average level.

However, due to the expected relaxation of monetary policy this year, there is no expectation of an economic recession.

Scott Anderson, Chief US Economist at BMO Capital Markets, said, "In the second half of the year, economic activity will indeed slow down and enter a track below potential growth rate

The market expects the Federal Reserve to hold its fire in July and begin cutting interest rates in September, as data shows the US economy regains momentum

After the latest data shows that the US economy regained momentum in the previous quarter, the market expects Federal Reserve policymakers to keep the short-term benchmark interest rate target range unchanged at 5.25% -5.50% next week, and then wait until September to start a series of interest rate cuts.

Traders believe that the likelihood of the Federal Reserve cutting interest rates at next week's meeting has decreased from around 9% before the report was released to less than 7%. The government report shows that the US economy grew at 2.8% in the second quarter, faster than expected and twice the growth rate of the first quarter.

Ryan Sweet from Oxford Economics wrote that economic acceleration "should help alleviate concerns about the sustainability of economic expansion and quell the argument that the Federal Reserve needs to cut interest rates in July".

Traders of futures contracts linked to the Federal Reserve's policy rate continue to believe that a 25 basis point rate cut will occur in September, November, and December, but have reduced their bets on a larger initial rate cut by the Fed.

Before the data was released, traders believed that the likelihood of the Federal Reserve cutting interest rates by more than 25 basis points at its September meeting was about 21%; Now this possibility has decreased to about 15%.

Harris pressured Netanyahu on the humanitarian situation in Gaza, saying 'I will not remain silent'

US Vice President Harris had a "frank" meeting with Israeli Prime Minister Netanyahu on Thursday and exerted strong pressure on him regarding the humanitarian situation in Gaza. If Harris is elected as the President of the United States, how will the policy towards Israel change? Various sectors are closely monitoring the signals released by this meeting.

Israel has the right to defend itself. But how to defend itself is important, "Harris told reporters after the meeting. She expressed serious concern about the extent of suffering suffered by the people of Gaza. I have clearly expressed my serious concern about the severe humanitarian situation there, "she said. I won't remain silent

Harris' sharp and serious tone in his speech reflects a possible shift in the way US President Biden deals with Netanyahu.

A few hours ago, Biden urged a ceasefire during a face-to-face meeting with Netanyahu. White House National Security spokesman John Kirby said that there are still differences between Israel and Hamas militants in pushing for a ceasefire, but the gap has narrowed now compared to before.

Kobe said, "Both sides must make compromises

I believe the message that the US will convey during this meeting is that we need to reach this agreement, "said US State Department spokesperson Miller

This visit comes at a time of political change in the United States, with Biden withdrawing from his re-election campaign on Sunday and supporting Harris as the Democratic nominee for the presidential election.

On Friday, Netanyahu will travel to Florida to meet with Trump.

Harris has always been consistent with Biden on the Israel issue, but his tone is more forceful.

Kremlin says Russia is willing to negotiate with Ukraine to end the war, but needs to clarify Kiev's willingness

The Kremlin stated on Thursday that Russia is willing to negotiate with Ukraine on ending the war (referred to as a special military operation by Moscow), but it needs to clarify Kiev's willingness to participate in such negotiations.

Kremlin spokesman Dmitry Peskov told reporters that Moscow is ready for negotiations, which may take various forms.

Harris quickly launched a campaign offensive to narrow the gap in polls with Trump

On Thursday, Vice President Harris launched a campaign offensive against the largest teachers' union in the United States, promising to "fight for the future"; Meanwhile, the latest poll results show that the gap between her and her Republican opponent Trump is narrowing.

Harris quickly took over 81 year old President Biden and became the Democratic presidential candidate, breaking the stagnant campaign situation. Multiple polls show that former President Trump's lead is continuously shrinking.

Harris, 59, gave a speech to the American Federation of Teachers in Houston, focusing on economic policies and worker rights, vigorously promoting affordable healthcare and childcare programs, while criticizing the Republican Party for obstructing gun control after school shootings.

We are fighting for the future, "Harris said to about 3500 viewers. We are fighting for the most basic freedoms. I want to say to all the leaders here: Keep going

Since Biden withdrew from the race on Sunday, a series of polls including Reuters/Ipsos have shown that Harris and Trump are evenly matched in a direct confrontation, laying the foundation for a fierce election campaign in the next three and a half months.

A national poll released by The New York Times/Siena College on Thursday showed that Harris has narrowed Trump's lead. Among registered voters, Trump has a slightly higher approval rating of 48% than Harris' 46%, compared to 49% to 41% in early July when Biden performed poorly in the just concluded debate, sparking calls within the Democratic Party for him to give up his candidacy.

Although national polls provide important signals of Americans' support for political candidates, typically only a few highly competitive states can influence the election results of the U.S. Electoral College, ultimately determining who can win the presidential election.

Harris has also received good news in this regard, as the poll results released by Emerson College/The Hill show that she has begun to narrow the gap with Trump in five key battleground states: Arizona, Georgia, Michigan, Pennsylvania, and Wisconsin. According to polls of registered voters in these states, except for Wisconsin, Trump still leads Harris by a narrow margin in other states, with Wisconsin tied with Trump.

Overall, polls show that although 78 year old Trump still maintains a slight advantage, his approval rating has not seen a significant increase after last week's Republican National Convention. Republican candidates had hoped to increase their approval rating through this highly scripted, televised, and costly convention.

Trump harshly criticized Harris at his first rally since replacing Biden as presidential candidate on Wednesday night. On Thursday, he continued to criticize her online.

Daily chart of spot gold