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Gold Gains Traction on Weak US Economic Data

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)
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Gold Gains Traction on Weak US Economic Data

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)

Gold prices edged up on Wednesday after data suggesting lacklustre US economic activity kept alive hopes for at least one interest rate cut this year.

Spot gold was up 0.1% at $2,330.27 per ounce as of 1156 GMT. Prices rose about 0.4% in the previous session.

US retail sales barely rose in May and figures for the prior month were revised considerably lower, data showed on Tuesday, suggesting economic activity remained lacklustre in the second quarter, Reuters reported.

That slightly boosted the odds of a Federal Reserve rate cut in September to 67% from 61% a day earlier, the CME FedWatch tool showed.

The main drive for gold's price action remains the market expectations over the Fed's monetary policy and despite prices creeping up, the move is quite subdued as the market waits for more substantial news, said Ricardo Evangelista, senior analyst at ActivTrades.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"Market expectations point to at least one rate cut from the Fed. That scenario has been fully priced in the value of the dollar. Government purchases (of gold) remain stable as well. So, unless there is any significant change in this scenario, prices are expected to remain supported above the $2,300 level," Evangelista said.

Gold prices rose about 1.3% last Friday on signs of inflation cooling in the United States amid a selloff across European equities as French stocks were battered by political turmoil.

Political uncertainty surrounding Europe can be a positive, with elections in France and the UK nearing, Kinesis Money market analyst Carlo Alberto De Casa said.

The more immediate focus, however, is on the US weekly jobless claims data on Thursday and flash purchasing managers' indexes on Friday.

Spot silver was up 0.1% at $29.54 per ounce, platinum rose 1.1% to $983.45 and palladium gained 1.9% to $904.00.

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Gulf Stock Markets Plunge Sharply Following Wall Street Slump

Stock screen during the decline of the US market (Reuters)
Stock screen during the decline of the US market (Reuters)
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Gulf Stock Markets Plunge Sharply Following Wall Street Slump

Stock screen during the decline of the US market (Reuters)
Stock screen during the decline of the US market (Reuters)

Gulf financial markets suffered significant losses on Sunday, tracking sharp declines on Wall Street last Friday after US President Donald Trump announced new reciprocal tariffs on countries with which the US maintains trade relations.

The Saudi stock market posted the steepest drop among the Gulf states, closing down 6.8%. It was followed by Kuwait’s Premier Market, which fell 5.7%, Qatar’s market down 4.2%, Muscat down 2.6%, and Bahrain posting the smallest drop at 1%. The Abu Dhabi and Dubai exchanges were closed Sunday, though they had ended the previous week in the red, erasing all gains since the beginning of the year.

Trump had announced a minimum 10% tariff on Gulf countries, among others. The S&P 500 shed nearly $5 trillion in value over two days, marking its worst performance since March 2020, with a sharp 6% drop on Friday alone. The Nasdaq 100 officially entered a bear market, down more than 20% from its recent peak.

Mohammed Al-Maimouni, a financial advisor at Al-Mutadawil Al-Arabi, told Asharq Al-Awsat that two main factors triggered the sell-off: first, Trump’s tariffs sparked a downturn in US markets, which rippled through global and Gulf markets. China’s retaliatory tariffs further compounded the impact. Second, oil prices fell below $70 per barrel, weighing on energy stocks.

Al-Maimouni added that markets and economies are gripped by uncertainty over the tariffs’ long-term effects.

“I expect continued volatility next week as investors adjust to the new reality,” he said.

Amid global economic tensions, Saudi Arabia’s Tadawul index dropped to its lowest level since December 2023, marking its worst daily loss since May 2020. The TASI index plunged 6.7% to close at 11,078 points, a drop of 804 points, with banking, energy, and utilities sectors leading the fall.

Blue-chip stocks were particularly affected. Aramco shares dropped 5.25% to SAR 24.92, Al Rajhi Bank declined 5.9% to SAR 94.70, and Saudi National Bank fell 6.82% to SAR 32.80.

Aramco’s market capitalization dropped to around SAR 6 trillion ($1.6 trillion), down from SAR 6.4 trillion at the time of its 2019 IPO—a 7% decrease. Since the start of the year, Aramco shares have lost roughly 12% amid growing pressure on energy stocks and falling oil prices amid fears of weakening global demand.

Al-Maimouni said the sharp sell-off was driven by local investors offloading their holdings, particularly in key banking stocks. “Aramco also breached a key support level at SAR 25, amplifying the losses,” he explained.

Broad Losses Across Gulf and Egypt

Kuwait’s Premier Market tumbled 5.7% to 8,106.1 points. Leading stocks took the brunt of the hit, with Kuwait Finance House down 5.5%, National Bank of Kuwait falling 7%, Gulf Bank losing 5%, and Boubyan Bank shedding 6.1%.

In Muscat, the market declined by 2.6%, while Qatar’s exchange dropped 4.2%, led by Qatar Industries, which plunged 8.2%. Bahrain’s bourse saw the mildest decline at 1%.

In Egypt, the stock market experienced its worst drop since April 2024. The main index closed down 3.34%, with the market losing EGP 80 billion