On Wednesday, gold prices held steady at a more than nine-month low as the dollar continued to impact metal demand as investors awaited U.S. monthly inflation data
On Wednesday (July 13), gold prices held steady at a more than nine-month low as cautious investors awaited monthly US inflation data for clues about the direction the US Federal Reserve’s (Fed) monetary policy might take. After falling to its lowest level since late September at US$1,722.30 earlier, spot gold was up 0.1% at US $1,727.89 (or RM7,659.74) per ounce at 0239 GMT. At $1,725.30, US gold futures remained unchanged.
The dollar remained at 20-year highs, reducing the allure of gold priced in dollars for purchasers holding foreign currencies. The rise in benchmark 10-year U.S. Treasury rates diminished the allure of non-yielding gold. Economists surveyed by Reuters estimate the U.S. Labour Department’s June Consumer Price Index (CPI) to have advanced on both a monthly and annual basis, by 1.1 percent and 8.8 percent, respectively.
In the absence of a significant shock, the CPI data may confirm investors’ expectations for the Fed to raise interest rates by 75 basis points later this month as it attempts to control inflation.
It seems like long positions in gold are still swimming upstream since the market is optimistic the Fed would implement the large rise at its July meeting, but Innes said news suggesting inflation has peaked should lessen the impetus for rate hikes and gold could take a tiny flight.
Even though gold is a hedge against inflation, investors tend to steer clear of bullion since it does not generate any income. On Tuesday, the holdings of SPDR Gold Trust, the biggest gold-backed exchange-traded fund in the world, decreased by 0.17 percent, coming in at 1,021.53 tonnes. This number is down from 1,023.27 tonnes on Monday. The price of an ounce of spot silver increased by 0.3 percent to $18.94, while the price of an ounce of platinum jumped by 2 percent to $847.27, and the price of palladium increased by 0.2 percent to $2,029.90.
