Gold Prices Inch Up After Inflation Data
Gold prices inched up on Thursday after a 1% decline in the previous session following inflation data that dampened hopes for a larger September U.S. rate cut, while the focus shifted to retail sales data.
Spot gold rose 0.2% to $2,452.83 per ounce, as of 0317 GMT, after prices fell their most since Aug. 6 on Wednesday. U.S. gold futures were 0.4% up at $2,490.20.
Impact of US Inflation Data on Gold Prices
The prospects of less aggressive rate easing may have triggered some profit-taking in gold prices overnight, suggesting that there may have been an overreaction to the previous day’s downside move. The subsequent slight rebound in prices indicates optimism within the market regarding gold’s resilience.
Market Sentiment and Rate Cut Speculation
Data on Wednesday showed that the U.S. consumer price index rose moderately in July, leading to a slowdown in the annual increase in inflation. While this paves the way for a possible rate cut by the U.S. Federal Reserve next month, a significant reduction seems unlikely. Traders have revised their expectations, with a decreased likelihood of a 50-basis-point rate cut in September.
A low interest rate environment tends to enhance the appeal of non-yielding assets like gold, which could further support its price trajectory.
Market Focus on Retail Sales and Jobless Claims Data
The market’s attention has now turned to forthcoming U.S. retail sales and initial jobless claims data, expected at 1230 GMT. These economic indicators will provide further insight into the health of the economy and potentially influence gold prices depending on the data outcome.
Potential for Gold to Reach Record High
Given the current climate of the Fed’s rate-easing cycle, robust central bank demand, and various geopolitical and economic uncertainties, there is speculation that gold could be poised for a breakout to new record highs. This combination of factors may contribute to further price appreciation in the gold market.
Other Precious Metals and Market Insights
Spot silver gained 0.2% to $27.65, platinum rose 0.9% to $927.51, and palladium edged 0.1% higher to $936.26. South Africa’s Northam Platinum also issued a warning related to the global economic outlook affecting platinum group metal prices.
