Gold prices firm ahead of key U.S. inflation reading
Gold prices firmed on Friday ahead of a key U.S. inflation reading that could provide more insights into when the Federal Reserve might cut interest rates. Spot gold rose 0.4% to $2,374.14 per ounce by 0235 GMT, but was down 1% for the week. U.S. gold futures also climbed 0.7% to $2,371.00.
“Currently, the precious metal is seeing a cool-off period before prices potentially start marching higher in the last quarter of this year,” said Sugandha Sachdeva, founder of SS WealthStreet. She believes that gold could hit $2,680 by the end of the year as rate cuts are expected. The U.S. presidential election and US-China trade tensions could act as triggers for a significant rebound in gold prices.
Market focus on U.S. PCE data
Market focus on Friday will be on the June U.S. personal consumption expenditure (PCE) data, which is the Federal Reserve’s favored measure of inflation. This data is set to be released at 1230 GMT. Data from Thursday showed that the U.S. economy grew faster than expected in the second quarter, but inflation pressures have subsided, maintaining expectations of a September rate cut.
Impact of low-interest-rate environment on gold
In a low-interest-rate environment, non-yielding bullion like gold tends to become more appealing to investors.
Geopolitical factors influencing gold prices
On the geopolitical front, U.S. Vice President Kamala Harris has urged Israeli Prime Minister Benjamin Netanyahu to help achieve a Gaza ceasefire deal, taking a tougher stance compared to President Joe Biden.
Other precious metals performance
Spot silver stabilized at $27.95 per ounce, while platinum saw a 0.9% gain to reach $941.25. Both metals were heading for their third consecutive weekly decline. Palladium also rose by 0.9% to $914.68.
(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips and Subhranshu Sahu)
Insight: The upcoming U.S. inflation data is crucial for understanding the Federal Reserve’s policy direction, and any surprises in the data could impact gold prices significantly. Geopolitical tensions, especially in regions like the Middle East, can also play a role in influencing gold prices as investors seek safe-haven assets during uncertainties. Additionally, the performance of other precious metals like silver, platinum, and palladium can provide further insights into the broader trends in the precious metals market.
