Gold Prices Edge Up as Investors Await US Inflation Report
* June US CPI data due on Thursday
* Global gold ETFs saw second month of inflows in June, says WGC
Gold prices edged up on Wednesday following Federal Reserve Chair Jerome Powell’s comments indicating a stronger case for interest rate cuts, as investors awaited a crucial U.S. inflation report.
Spot gold rose 0.4% to $2,372.83 per ounce by 0900 GMT, while U.S. gold futures climbed 0.5% to $2,379.20.
“It sounds as if Jerome Powell’s testimony (yesterday) was giving at least an amber light towards rate cuts sooner than later, which is supporting the prices,” said StoneX analyst Rhona O’Connell.
Investor Sentiment and Rate Cut Expectations
Powell maintained a cautious stance on Tuesday, highlighting improved inflation and the need for more positive data to strengthen the case for looser monetary policy.
“With the recent run of weaker U.S. data, the case has been built around a September rate cut, but with the Fed Chair still wanting to see more good data, further inflation progress will be needed to offer more confidence for policymakers to open the door to rate cuts,” said IG market strategist Yeap Jun Rong.
Traders currently see about a 73% chance of a rate cut in September, according to the CME Group’s FedWatch Tool, with another cut expected by December.
Market Impact and Influencing Factors
Non-yielding bullion’s appeal tends to shine when interest rates fall, making gold a favorable investment in a low-rate environment.
Investors are closely monitoring Powell’s second day of testimony to the House, along with the upcoming U.S. consumer price index (CPI) data set to be released on Thursday. The CPI data is expected to show modest month-on-month and annual gains, impacting market expectations.
Insight into ETF Flows
Meanwhile, global physically backed gold exchange-traded funds (ETFs) saw the second consecutive month of inflows in June, driven by increased holdings from Europe- and Asia-listed funds, as reported by the World Gold Council.
Spot silver gained 0.6% to $30.98 per ounce, platinum rose 0.3% to $987.26, and palladium edged 0.2% lower to $978.73.
(Reporting by Daksh Grover in Bengaluru; Editing by Varun H K)
Overall, the increased interest in gold ETFs suggests a continued bullish sentiment towards the precious metal, reflecting investor confidence in its long-term value.
