Gold prices have entered a period of relative stability following the notable breach of the pivotal $1,900 support level, triggered by robust U.S. consumer spending data. This data has sparked speculation that the Federal Reserve might not have concluded its interest rate hiking cycle.
At 0123 GMT, spot gold remained unchanged at $1,900.90 per ounce, while U.S. gold futures experienced a marginal dip of 0.1%, resting at $1,933.
The dip in gold prices on Tuesday saw it reaching its lowest value since end-June, a dip that coincided with benchmark 10-year U.S. Treasury yields ascending to nearly a 10-month high. This shift prompted a more attractive proposition for investors than non-interest bearing bullion.
The buoyant U.S. retail sales figures for July, surpassing expectations, signaled ongoing economic expansion into the third quarter, dispelling immediate recession concerns. Market participants also await insights from the Federal Reserve’s July policy meeting minutes, keen to decipher forthcoming rate strategies.
Minneapolis Fed President Neel Kashkari’s commentary adds to the dialogue, suggesting that despite progress in combatting inflation, interest rates might still need to increase further to fully address the issue.
Beyond the U.S., Britain’s record growth rate in basic wages has engendered concerns for the Bank of England regarding long-term inflation pressures, even amid a series of 14 consecutive rate hikes.
Internationally, Goldman Sachs’ report has highlighted that global hedge funds are engaging in “aggressive” selling of Chinese stocks due to heightened anxieties surrounding the nation’s property sector and a series of lackluster economic data.
Reflecting the sentiment toward gold, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, have reached their lowest levels since January 2020, dropping to 894.43 metric tons.
In the broader spectrum of precious metals, spot silver experienced a 0.1% increase, resting at $22.52 an ounce, while platinum underwent a minor 0.1% decrease, settling at $887.81. Palladium, on the other hand, observed a 0.2% gain, reaching $1,237.40.
The day ahead will witness an array of data and events, including the UK’s Core CPI YY and CPI YY for July, the EU’s GDP Flash Estimate QQ and YY for Q2, U.S. Housing Starts Number for July, U.S. Industrial Production MM for July, and the release of the minutes from the Federal Open Market Committee’s meeting of July 25-26.
