Gold steady after data shows drop in U.S. inflation

by Jonathan Adams
inflation pressures

Spot gold was almost unchanged at $2,324.44 per ounce, and U.S. gold futures were 0.2 per cent lower at $2,336.10

Gold prices held steady on Monday after data showed U.S. inflation cooled, strengthening hopes that the Fed will start cutting interest rates this year.

Spot gold was almost unchanged at $2,324.44 per ounce, as of 0427 GMT. Prices climbed more than 4 per cent in the second quarter.

U.S. gold futures were 0.2 per cent lower at $2,336.10.

Data showed on Friday that the personal consumption expenditures (PCE) index, rose 2.6 per cent after gaining 2.7 per cent in April. May inflation figures were in line with economists’ expectations.

The latest U.S. inflation data remain fresh on investors’ mind, with the data coming in line with consensus and generally did little to sway current market rate expectations for the Federal Reserve’s easing process to start in September, according to IG market strategist Yeap Jun Rong.

But, “any failure to defend the $2,280 level ahead may potentially pave the way for gold prices to head towards the $2,200 next”.

Traders are pricing in a 64 per cent possibility of a first rate cut in September, as per the CME FedWatch tool. Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

Market focus shifts to remarks from Fed Chair Jerome Powell on Tuesday, followed by minutes from the Federal Reserve’s latest policy meeting on Wednesday and U.S. labour market data later in the week.

Although central bank purchases have slowed down in recent months, we believe emerging market’s central banks will continue to diversify their reserves into gold, ANZ said in a quarterly note.

Spot silver slipped 0.2 per cent to $29.06, platinum dropped 0.7 per cent to $986.08 and palladium held steady at $972.74.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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