Gold Climbs on Inflation Data Anticipation

13 Aug 2024 , 09:06 AM

Gold prices fell on Tuesday but remained close to a one-week high as markets awaited critical US inflation data that could provide additional insight into the Federal Reserve’s next policy decision.

Spot gold declined 0.2% to $2,466.69 per ounce, after reaching its top since August 2 earlier in the day.

Gold futures increased 0.1% to $2,506.90.

Traders are waiting for the July U.S. producer pricing index (PPI), which is coming later in the day, followed by the consumer price index (CPI) on Wednesday. The CPI data is likely to indicate that headline and core prices increased 0.2% month on month.

The CME FedWatch Tool predicts a 50% possibility of the Fed cutting interest rates by 50 basis points in September. A low interest rate environment tends to make non-yielding bullion more appealing.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, increased its holdings by 0.34% on Monday to 849.79 metric tonnes from 846.91 tonnes on Friday.

The U.S. government reported a $244 billion budget deficit in July, up 10% from the previous year, but accounting for calendar variances, the shortfall would have been $45 billion smaller, according to the Treasury Department.

On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu exchanged barbs with his defence minister, highlighting the government’s profound internal divisions as the Gaza war threatens to escalate into a larger regional confrontation.

Spot silver rose 0.5% to $27.8607 per ounce, platinum increased 0.2% to $938.55, and palladium fell 0.4% to $917.10.

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