After inflation data, gold is weaker than the US dollar and rates are holding steady in early trade

11 Aug 2023 , 10:00 AM

As markets evaluated the lower-than-expected U.S. inflation statistics on Friday, gold prices remained close to one-month lows. However, as long as the U.S. dollar and bond rates remain high, gold will end up having its worst week in seven.

Spot gold traded near its lowest levels since July 7 reached earlier in the day, rising 0.2% to $1,914.87 per ounce. At $1,946.90, U.S. gold futures were unchanged.

The benchmark 10-year Treasury bond yields and the U.S. dollar index are both expected to increase for a fourth consecutive week, which has caused gold prices to decline by roughly 1.4% so far this week. 

The consumer price index (CPI) for the United States increased by 0.2% in July, mirroring June’s increase. The annualized rate increased by 3.2%, which was less than the 3.3% prediction made by Reuters.

In response to the data, traders wagered that U.S. Federal Reserve policymakers will likely start cutting interest rates early next year rather than raising them again in 2023.

As interest rates decline, there is a tendency for gold to rise as the opportunity cost of storing non-yielding metal decreases.

As the U.S. economy enters a ‘watershed moment,’ Philadelphia Fed President Patrick Harker said on Thursday that the Fed is making headway in its efforts to reduce inflation.

Fed Bank of San Francisco Even though the most recent inflation figures are trending in the right direction, according to Mary Daly, more improvement is required before the Fed has done enough.

Spot silver increased by 0.4% to $22.76 an ounce while platinum increased by about 1% to $914.80, among other precious metals. However, both teams were headed for their fourth consecutive weekly loss.

Palladium increased 1.1% to $1,300.36 and is expected to have its best week since mid-June.

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