In the early Asian session on Thursday, the price of gold (XAU/USD) experienced an uptick, reaching close to $2,450, breaking a two-day streak of losses. The precious metal received a boost from a weakening US Dollar (USD), providing support for investors eyeing the market.
Investor focus is set on key economic indicators scheduled for release later in the day, including US Retail Sales, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production. These data points are expected to guide market sentiment and influence gold’s trajectory.
Recent data from the Labor Department unveiled that inflation in the US met expectations for July. The Consumer Price Index (CPI) showed a 0.2% month-on-month increase, translating to an annual inflation rate of 2.9%. The core CPI, excluding volatile food and energy prices, also rose by 0.2% month-on-month in July, with an annual rate of 3.2%, aligning with consensus forecasts.
Phillip Streible, chief market strategist at Blue Line Futures, noted a shift in market sentiment towards a more conservative 25 basis point rate cut, potentially dampening the momentum in the gold market. The probability of a 50 basis points rate cut by the Federal Reserve (Fed) in September has decreased to around 41% following the release of the US CPI data, as per the CME FedWatch Tool.
While Fed officials have hinted at a willingness to adjust policy, they remain cautious about committing to a specific timeline or rate adjustment pace. Atlanta Fed President Raphael Bostic emphasized the need for further evidence before endorsing lower interest rates during a statement on Tuesday.
Amidst these market dynamics, ongoing geopolitical tensions and economic uncertainties continue to play a crucial role in supporting safe-haven assets like gold. Iran’s dismissal of calls from Western nations to refrain from retaliatory actions following the assassination of Hamas leader Ismail Haniyeh in Tehran last month underscores the geopolitical complexities that could drive investors towards the security of the yellow metal.
