Gold climbs as traders brace for US inflation data
Thu July 11 2024
Gold prices firmed for a third consecutive session on Thursday, with investors awaiting US inflation data due later in the day for more insights on the Federal Reserve’s interest rate path.
Spot gold gained 0.5% to $2,381.83 per ounce by 0437 GMT. US gold futures rose 0.3% to $2,385.50. The dollar was on the back foot, making greenback-priced bullion more attractive for other currency holders.
The June Consumer Price Index (CPI) report is due at 1230 GMT and the Producer Price Index (PPI) reading on Friday. Any downside surprise in the CPI report could weaken the dollar and push up gold prices to the $2,400 level, said Marex analyst Edward Meir.
US inflation should continue to fall without a significant further rise in the unemployment rate, Fed Governor Lisa Cook said on Wednesday. “I think gold is in a new paradigm, in a higher trading range and we’re not going to see the old lows anymore. Another record high is possible this year if we get a geopolitical shock,” Meir said. Gold is considered a hedge against geopolitical turmoil and the non-yielding metal’s appeal tends to shine when interest rates are low.
Fed Chair Jerome Powell said on Wednesday that the US central bank would make interest rate decisions “when and as” they were needed. On Tuesday, he told House members that “more good data” would build the case for a rate cut.
Traders are currently pricing in a 46% probability that the Fed will have cut rates by two notches by the end of December’s meeting and a 73% probability for the first cut in September, according to CME Group’s FedWatch tool. According to Reuters technical analyst Wang Tao, spot gold may retest support at $2,368 per ounce, a break below which could open the way towards $2,353.
Spot silver climbed 0.7% to $31.04 per ounce, platinum firmed 0.4% to $993.25 and palladium gained 0.7% to $992.90.