PT Rifan Financindo Berjangka – Gold Steady Gains After U.S. Inflation Data
Gold held a two-day gain, after a surprise slowdown in U.S. inflation revived expectations for a Federal Reserve interest rate cut this year.
Bullion traded around $2,695 an ounce near its highest in a month after the consumer price index, which excludes food and energy costs, rose 0.2% after four months of 0.3% gains. That suggests U.S. officials may have room to ease policy sooner than previously thought.
Treasury yields and the dollar fell after the release, boosting bullion’s appeal because it bears no interest and becomes cheaper for most buyers when the U.S. dollar weakens. Swap traders are now fully pricing in a July rate cut again a reversal after strong jobs data on Friday saw markets push back expectations for easing to September or October.
A number of Fed officials on Wednesday expressed confidence that price pressures would continue to ease, but some cautioned that the battle against inflation was not over. Monetary policy easing was a major catalyst for the precious metal’s rally to a record last year.
Spot gold was little changed at $2,695.06 an ounce at 7:51 a.m. in Singapore, after rising 0.7% in the previous session. The Bloomberg Dollar Spot Index was steady. Silver held onto a 2.5% gain on Wednesday, while platinum and palladium were flat.
Source: Bloomberg
Gold Advances as Softer Core CPI Data Revives Fed Easing Hopes
Gold prices extended gains on Wednesday, as the dollar dipped after U.S. core inflation data came in softer than expected, abating inflation pressures and rekindling expectations that the Federal Reserve’s easing cycle may not be over yet.
Spot gold gained 0.6% to $2,693.63 per ounce by 02:23 p.m. ET (1923 GMT). U.S. gold futures settled 1.3% higher at $2,717.80.
Excluding volatile food and energy components, core CPI increased 3.2% on an annual basis, compared with an expected 3.3% rise, the U.S. Bureau of Labor Statistics said on Wednesday.
“Core CPI came in a little bit below expectations. This is a bit of a positive for gold… The corollary to this is that the Fed will not necessarily exclude the possibility of cutting rates,” said Bart Melek, head of commodity strategies at TD Securities.
“The probability of a rate cut in January is kind of nothing, but we are pricing some rate cuts by the end of the year here.”
Markets now expect the Fed to deliver 40 basis points (bps) worth of rate cuts by year-end, compared with about 31 bps before the inflation data. PT Rifan Financindo Berjangka.
Source : Reuters