Hotter-than-expected U.S. inflation data could potentially drive gold prices down
On Thursday, gold prices saw an increase as investors directed their focus towards upcoming U.S. economic indicators. Markets await the impact of the economic data on potential interest rate adjustments by the Federal Reserve.
In the UAE, gold prices increased, with 24-carat gold reaching AED280.25 per gram, while 22-carat gold rose to AED259.50. Twenty-one-carat gold recorded AED251.25, while 18-carat gold reached AED215.25.
Globally, spot gold saw a 0.28 percent increase to $2,315.41 per ounce, as of 5:16 GMT. Meanwhile, U.S. gold futures saw a marginal 0.03 percent increase to $2,315.41.
U.S. economic data
Investors now shift their attention to U.S. economic data releases, including the weekly jobless claims data scheduled at 12:30 GMT. Additionally, the University of Michigan’s consumer sentiment reading slated for Friday and the consumer price index data next week should offer valuable insights into the economic landscape and interest rate cut timing.
Analysts underscored the cautious sentiment among gold traders, particularly in light of the upcoming U.S. inflation report. They believe that a hotter-than-expected inflation report could potentially drive gold prices down to $2,290. Moreover, they warned that breaching below this threshold could trigger a further decline to $2,240.
Susan Collins, President of the Federal Reserve Bank of Boston, articulated the necessity for a cooling-off period within the U.S. economy to achieve a target inflation rate of 2 percent.
Other factors impacting gold prices
Traders are closely monitoring the probability of a Fed rate cut, with the CME’s FedWatch Tool indicating a 66 percent chance of a rate cut in September. Lower interest rates typically diminish the opportunity cost of holding gold, thus influencing market dynamics and supporting prices.
The World Gold Council (WGC) notes the resilience of gold prices amidst geopolitical tensions, citing factors such as central bank demand, investor interest (particularly in East Asia), and geopolitical premiums as supporting pillars for the precious metal.
Read: Oil prices rise on mixed Chinese trade data, Middle East tensions
Other precious metals
In addition to gold prices, spot platinum saw a 0.81 percent increase to $979.62 while palladium rose 0.36 percent to $955.25. Meanwhile, spot silver saw a 0.69 percent increase to $27.53
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