Gold prices continued their upward trajectory, marking a two-day advance after US inflation showed signs of slowing down, sparking renewed optimism for potential Federal Reserve rate cuts later this year. Bullion traded near $2,695 per ounce, approaching a one-month high, following the release of the consumer price index (CPI), which excludes food and energy costs. The index increased by just 0.2% after four consecutive months of 0.3% rises, suggesting that the Federal Reserve might have the opportunity to ease its monetary policy sooner than expected.
The inflation data caused Treasury yields and the US dollar to decline, enhancing gold’s appeal. Since gold does not generate interest, it becomes more attractive when the dollar weakens, making it cheaper for buyers using other currencies. Swap traders have now fully priced in a rate cut by July, marking a sharp shift in sentiment after Friday’s stronger-than-expected jobs data had previously pushed back easing expectations to September or October.
While several Federal Reserve officials on Wednesday expressed confidence that inflationary pressures would continue to subside, some cautioned that the fight against inflation was far from over. Last year, easing monetary policy played a significant role in propelling gold to a record high.
As of 7:51 a.m. in Singapore, spot gold remained stable at $2,695.06 per ounce, following a 0.7% increase in the previous session. The Bloomberg Dollar Spot Index remained unchanged, while silver held onto its 2.5% gain from Wednesday. Platinum and palladium prices remained flat.
Related topic:
How to Trade Comex Gold Futures?
