Spot Gold Sees Modest Rise Ahead of CPI Figures; Expert Opinions Diverge on Future Trends
In the wake of recent market fluctuations, spot gold made a slight gain of 0.2%, reaching $1,918.24 per ounce as of 0752 GMT. This movement comes as the precious metal hovers near its lowest point since July 10, a dip it encountered just a day prior. In parallel, U.S. gold futures held steady at $1,951, reflecting a cautious stance among investors.
Anticipation is mounting as U.S. consumer price index (CPI) data is slated to be unveiled at 1230 GMT. The projections indicate a minor uptick in inflation for July. OCBC’s Executive Director and FX Strategist Christopher Wong highlighted, “While it is widely expected for U.S. headline to bounce on a year-on-year basis, the focus is on the core. Any larger-than-expected downside drag could help reinforce the disinflation trend and provide some support for gold prices.”
The surge in interest rates has presented a challenging scenario for non-yielding assets like gold, which has experienced a decline of over 7% since its near record highs in May. London-based consultancy CRU’s senior analyst Kirill Kirilenko believes that the removal of this bearish factor may grant “gold bulls a ‘green’ light to start pushing prices higher again.”
However, the situation remains nuanced. Despite signs of cooling, core PCE inflation continues to remain high, coupled with a tight labor market. Kirilenko pointed out that this context might deter the Fed from making any immediate policy shifts in favor of loosening.
Looking ahead, market sentiment is currently leaning towards the notion of no rate hike at the Fed’s upcoming policy meeting in September, with an 86.5% probability. Analysts anticipate that the central bank’s next move will likely be a rate cut, potentially in the spring of 2024.
The trajectory of gold’s outlook hinges on multiple factors, including market projections of rate cuts and the potential softening of the U.S. dollar. Christopher Wong from OCBC added, “Outlook for gold would regain shine when markets move in to price in greater probability of rate cuts and U.S. dollar softness. And this hinges on how entrenched the disinflation trend is.”
Reflecting the sentiments of investors towards bullion, the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, recently fell to their lowest level since March.
In tandem with the gold movement, spot silver witnessed a 0.6% rise to $22.81 per ounce. Meanwhile, platinum experienced a notable surge of 1.5%, reaching $901.45, and palladium saw a more modest gain of 0.8%, touching $1,245.03. As the market continues to navigate uncertainties, the path ahead for precious metals remains intertwined with a complex interplay of economic indicators and global dynamics.
