Gold prices turned lower after they had been rising a while ago during these moments of Thursday’s trading, despite the decline in the dollar and US Treasury bonds after US inflation data raised expectations that the Federal Reserve will stabilize interest rates next week.
Gold and dollar now
Gold futures fell 0.25% to $1,927 an ounce.
While spot gold contracts fell by 0.07% to $1,906 per ounce.
On the other hand, the dollar index fell by 0.06% to 104.337 points.
Gold at settlement yesterday
Gold prices fell at the settlement of trading yesterday, Wednesday, after the release of consumer price inflation data in the United States, which increased fears of continued tightening of monetary policy by the Federal Reserve.
According to a statement issued by the White House, President Joe Biden said: The overall inflation rate decreased significantly over the past year, but I know that the increase in energy prices last month put pressure on household budgets.
Upon settlement, gold futures for December delivery fell by 0.15%, or $2.6, to reach $1,932.5 per ounce, the lowest settlement since the twenty-second of last August.
Pressure on gold
“The big uncertainty is the path of the 2024 Fed rate cut, and that remains one of the catalysts causing volatility for gold,” said Christopher Wong, OCBC executive director and FX analyst.
He added: “The US CPI was largely within expectations and in some ways the previous fears of rising price pressures were alleviated.”
The US dollar index and 10-year Treasury yields fell after a Labor Department report on Wednesday showed that the annual rise in core inflation was the smallest in nearly two years, suggesting the Federal Reserve will keep interest rates unchanged next week.
However, US consumer prices rose in August by the most in 14 months as the cost of gasoline rose.
Official data showed that the consumer price index rose by 3.7% in August on an annual basis, after it reached 3.2% in July, and is higher than expectations of 3.6%. Today, investors are awaiting the release of the producer price index and retail sales data, to learn more about the expected path of monetary policy.
Analysts at the American asset management company Acadian expect the dollar and US Treasury bond yields to rise over the coming months, as they are likely to keep the Federal Reserve on the path of tightening monetary policy, according to Bloomberg.
Traders now see a 97% chance the Fed will leave interest rates unchanged on Wednesday, but there is a 42% chance of a rate hike in November, according to Investing Saudi Arabia's Fed rate tracker.
“Investors are waiting to see if the upcoming PPI data reflects the rise in CPI numbers,” said Tim Waterer, senior trading market analyst at KCM.
He added: If the rise in inflation is repeated in the coming months, further tightening by the Federal Reserve may occur. November is increasingly looking like it will be an important meeting given the rise in energy prices.
Investors are awaiting the European Central Bank's meeting on interest rates on Thursday, in light of a shift in market expectations to a 75% increase of 25 basis points, after reports indicated that the bank expects inflation in the euro zone to remain higher than 3% next year.
other metals
Spot silver fell 0.4% to $22.74 an ounce, platinum rose 0.3% to $902.43, and palladium rose 0.2% to $1,261.70.
