Gold prices increased on Thursday, following US inflation data that hinted at a potential Federal Reserve interest rate reduction next month, although the magnitude of the cuts is still unclear. This has led investors to anticipate additional economic indicators. As of 1131 GMT, spot gold had risen by 0.5 percent to $2,460.38 per ounce, just $23 short of the previous record high of $2,483.60 set last month. US gold futures also climbed, by 0.7 percent to $2,497.70.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold is facing resistance around the $2,475-80 range, with traders increasingly expecting the rate cut cycle to commence soon. The market is divided on whether the cut will be 25 or 50 basis points next month. According to the CME FedWatch Tool, markets have fully priced in a US rate cut in September.
Data released on Wednesday indicated that US consumer prices moderately increased in July, with annual inflation slowing to under three percent for the first time in nearly 3-1/2 years. This development has further paved the way for the Fed to lower interest rates next month. Atlanta Fed President Raphael Bostic expressed openness to a September interest-rate cut in an interview with the Financial Times, emphasizing that the Fed cannot delay easing monetary policy.
A low interest rate environment typically enhances the appeal of non-yielding bullion. The upcoming focus will be on US retail sales and initial jobless claims data. StoneX analyst Rhona O'Connell commented that a softening labor market would slightly support gold prices, and vice versa. Among other metals, spot silver rose by two percent to $28.15 per ounce, supported by rising copper prices due to supply concerns from strike action at the world’s largest mine in Chile.
Platinum increased by 2.1 percent to $938.50, while palladium saw a slight decline, dipping 0.1 percent to $934.25.
