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Gold rates rise as dollar drops
(MENAFN) Gold prices experienced a modest increase during early trading on Thursday, buoyed by a weakening dollar and declining United States Treasury yields. This uptick in gold prices comes as investors await further economic data to refine their forecasts following a recent inflation report that tempered expectations for a significant interest rate cut by the Federal Reserve in September.
As of 0547 GMT, spot gold was trading at USD2,452.69 per ounce, marking a 0.2 percent rise. This follows a significant decline on Wednesday, which was the largest drop since early August. Concurrently, United States gold futures saw a 0.4 percent increase, reaching USD2,490.10, according to Sky News Arabia.
The decline in gold prices on Wednesday coincided with a drop in both the dollar and 10-year Treasury yields, which had hit their lowest levels in over a week during the previous session.
Analyst Yip Jun Runge from IG pointed out that the reduced likelihood of a more substantial rate cut may have prompted some profit-taking in the gold market overnight. The latest data revealed a slight rise in the United States Consumer Price Index (CPI) for July, with the annual inflation rate slowing to below 3 percent for the first time since early 2021. This data has provided the Federal Reserve with more flexibility in adjusting interest rates, though a substantial rate cut remains improbable.
Market expectations for a rate cut in September have shifted, with nearly 36 percent of traders now betting on a 50 basis point cut, down from 50 percent before the CPI data release. The shift in expectations reflects the ongoing uncertainty and the balancing act the Federal Reserve faces as it navigates economic conditions and inflationary pressures.
As of 0547 GMT, spot gold was trading at USD2,452.69 per ounce, marking a 0.2 percent rise. This follows a significant decline on Wednesday, which was the largest drop since early August. Concurrently, United States gold futures saw a 0.4 percent increase, reaching USD2,490.10, according to Sky News Arabia.
The decline in gold prices on Wednesday coincided with a drop in both the dollar and 10-year Treasury yields, which had hit their lowest levels in over a week during the previous session.
Analyst Yip Jun Runge from IG pointed out that the reduced likelihood of a more substantial rate cut may have prompted some profit-taking in the gold market overnight. The latest data revealed a slight rise in the United States Consumer Price Index (CPI) for July, with the annual inflation rate slowing to below 3 percent for the first time since early 2021. This data has provided the Federal Reserve with more flexibility in adjusting interest rates, though a substantial rate cut remains improbable.
Market expectations for a rate cut in September have shifted, with nearly 36 percent of traders now betting on a 50 basis point cut, down from 50 percent before the CPI data release. The shift in expectations reflects the ongoing uncertainty and the balancing act the Federal Reserve faces as it navigates economic conditions and inflationary pressures.
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