Title: Gold prices initiated the trading week on a solid note on Monday, finding support in a weakening U.S. dollar. Investors are eagerly anticipating the release of U.S. inflation data later this week, which is poised to provide crucial insights into the Federal Reserve’s forthcoming interest rate decisions.
Here are the fundamental highlights of the gold market:
Spot Gold: Spot gold witnessed a marginal 0.1% increase, reaching $1,919.52 per ounce as of 0105 GMT. However, it continued to hover near one-week lows registered on September 6. During the previous week, bullion experienced a 1% decline. Meanwhile, U.S. gold futures remained stable at $1,943.
Dollar and Bond Yields: The U.S. dollar and benchmark 10-year bond yields both receded by 0.2%. This decline made non-yielding gold increasingly attractive to international investors.
U.S. Consumer Price Index (CPI): The U.S. Consumer Price Index (CPI) for August is scheduled for release on Wednesday, and it is expected to play a pivotal role in shaping the Federal Reserve’s interest rate decisions for the remainder of the year.
Federal Reserve’s Policy Outlook: In the lead-up to their policy-setting meeting this month, Federal Reserve policymakers have conveyed two key messages: They are not eager to raise interest rates, but they are also cautious about prematurely declaring victory in the current economic landscape.
European Central Bank: Economists polled by Reuters anticipate that the European Central Bank will maintain its interest rates unchanged on September 14. However, just under half of the economists expect one more rate hike later in the year as a measure to combat inflation.
Bank of Japan’s Statement: Bank of Japan Governor Kazuo Ueda indicated that the central bank could consider ending its negative interest rate policy when the achievement of its 2% inflation target comes into view. This statement suggests the possibility of future interest rate hikes.
China’s Economic Data: Data from China revealed that consumer prices in the country returned to positive territory in August, while the decline in factory-gate prices slowed down. These developments signal a reduction in deflationary pressures and indicate signs of economic stabilization.
Gold Discounts and Premiums: In India, discounts on physical gold reached their highest levels in seven weeks. Conversely, premiums in China rose last week, driven by optimism stemming from the country’s policy measures aimed at bolstering its economy.
Other Precious Metals: In addition to gold, other precious metals also exhibited movement in the market. Spot silver saw a 0.2% increase, reaching $22.95 per ounce. Platinum recorded a slight 0.1% gain, settling at $893.04, following a 7% decline during the previous week. Palladium edged up by 0.1%, closing at $1,199.03.
As the week progresses, market participants will be closely monitoring the release of U.S. inflation data, which is expected to provide further clarity on the economic landscape and influence future market dynamics.
