On May 15, gold prices slightly decreased as investors awaited crucial U.S. inflation data that could shed light on the Federal Reserve’s interest rate plans.
Fundamentals
* Spot gold was down 0.1% at $2,355.24 per ounce, following a 1% increase on Tuesday.
* U.S. gold futures held steady at $2,361.10.
* All eyes are on the upcoming U.S. Consumer Price Index (CPI) data set to be released at 1230 GMT.
* In April, U.S. producer prices surged more than anticipated, signaling persistent inflation in the early part of the second quarter.
* Federal Reserve Chairman, Jerome Powell, predicted a gradual decline in U.S. inflation, suggesting minimal chances of a further interest rate hike by the Fed.
* Loretta Mester, President of the Federal Reserve Bank of Cleveland, justified the Fed’s decision to maintain steady rates until clear evidence points towards a decrease in price pressures.
* The decrease in interest rates decreases the opportunity cost of holding onto non-interest-bearing assets like gold.
* BHP Group’s Australian-listed shares rose by 2.3% following Anglo American’s announcement of a breakup plan to thwart a $43 billion acquisition bid.
* Anticipation of a potential Fed interest rate cut as early as September, reflected by lower U.S. bond yields and a weak dollar, is expected to boost Asian markets initially, but uncertainties remain.
* Spot silver dipped by 0.2% to $28.52 per ounce, while platinum rose by 1.6% to $1,047.73 and palladium increased by 0.9% to $986.15.
Data/Events (GMT)
0645 France CPI (EU Norm) Final MM, YY April
0900 EU GDP Flash Estimate QQ, YY Q1
1000 EU Reserve Assets Total April
1230 US Core CPI MM, SA; YY, NSA April
1230 US CPI MM, SA; YY, NSA April
1230 US CPI Wage Earner April
1230 US Retail Sales MM April
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing
by Sherry Jacob-Phillips)
Insight:
Adding to the uncertainty in the market is the ongoing geopolitical tensions between the US and China, which could further impact the prices of gold. Geopolitical events often drive investors towards safe-haven assets like gold, leading to increased volatility in the precious metal’s prices. In times of economic uncertainty, gold tends to perform well as it is considered a hedge against inflation and currency fluctuations.
