Gold prices showed a modest recovery on Thursday after experiencing a 1% decline the previous session, influenced by inflation data that dampened expectations for a more significant rate cut by the U.S. Federal Reserve.
As of 0317 GMT, spot gold had increased by 0.2% to $2,452.83 per ounce. This uptick followed its largest drop since August 6 on Wednesday. U.S. gold futures rose by 0.4% to $2,490.20.
Market strategist Yeap Jun Rong from IG noted that the decline in gold prices overnight could have prompted some profit-taking. He indicated that the Asian trading session was seeing a partial rebound as traders reconsidered the impact of the inflation data.
Wednesday’s data revealed a moderate rise in the U.S. consumer price index for July, with the annual inflation rate slowing to below 3% for the first time since early 2021. This data suggested that while the Federal Reserve might still consider a rate cut next month, a substantial reduction is less likely. According to the CME FedWatch Tool, traders now estimate a 36% chance of a 50-basis-point cut in September, down from 50% prior to the release of the data.
In a low interest rate environment, the appeal of non-yielding assets like gold tends to increase. The market’s attention is now shifting towards upcoming U.S. retail sales and initial jobless claims data, set for release at 1230 GMT.
Yeap also highlighted that gold could potentially reach new record highs, driven by the Fed’s rate-easing cycle, robust central bank demand, and ongoing geopolitical and economic uncertainties.
In related metals, spot silver rose by 0.2% to $27.65, platinum climbed 0.9% to $927.51, and palladium edged up by 0.1% to $936.26.
Northam Platinum of South Africa has forecasted a significant drop in profits, attributing it to an uncertain global economic outlook that is expected to keep platinum group metal (PGM) prices subdued for some time.
