US gold prices climb higher, centering on upcoming US inflation figures
In the world of finance, the upcoming US inflation data is set to play a significant role in shaping expectations for a Federal Reserve (Fed) rate cut and gold prices.
Recent data has shown a slight rise in inflation, with the US annual inflation rate accelerating to 2.8% in July, up from 2.7% in June—the highest since February. Core inflation also edged up to 3.0%, signaling mild inflationary pressure. However, gold prices rallied following CPI data showing no month-over-month change, driven by speculation that the Fed will cut rates given concerns about weak economic growth and low inflation overall.
Current market expectations price in over an 80% chance of a Fed rate cut at the September meeting. This is fueled partly by persistent weak economic signals and political pressure on the Fed to lower rates to stimulate growth. The prospect of a rate cut increases gold's appeal as a non-yielding asset, pushing its price toward resistance levels around $3,500 per ounce.
Conversely, if inflation unexpectedly rises sharply, it could reduce rate cut expectations and weigh on gold. On the other hand, if upcoming inflation data shows continued moderation or cooling, it will likely reinforce expectations for a Fed rate cut and support rising gold prices.
Elsewhere, the spot price of gold was at $3,350.03 per ounce, while spot silver gained 0.6 per cent to $37.81 per ounce. Palladium climbed 0.7 per cent to $1,143.93, and platinum rose 0.6 per cent to $1,334.24.
Meanwhile, US President Donald Trump announced that tariffs will not be placed on imported gold bars. Crude oil prices fell on optimism over a proposed US-Russia meeting.
India benchmarks are likely to open flat ahead of the release of domestic inflation data. Economists predict that the core Consumer Price Index (CPI) is likely to have risen 0.3% in July. The core CPI data is due at 1230 GMT.
Markets are also focusing on who will succeed current Fed Chair Jerome Powell, whose term ends next May. The CME FedWatch Tool indicates an 85% chance of a Fed rate cut next month. Market volatility is common around these releases because every decimal point can change expectations for rate policy, which in turn impacts gold and other rate-sensitive assets.
In summary, the immediate impact of the upcoming US inflation data is that it will be closely watched to confirm whether inflation pressures ease enough to sustain or increase expectations for a Fed rate cut, which would buttress gold prices further.
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