Gold prices experienced a decrease on Monday as investors awaited crucial U.S. inflation data, which could offer insights into the timing of the Federal Reserve’s initial rate adjustment.
By 1204 GMT, spot gold had declined by 0.7% to $2,344.53 per ounce, following its recent peak on Friday, the highest since April 22. It was poised for its most significant daily drop in almost two weeks. U.S. gold futures also saw a decline of about 1% to $2,350.80.
The U.S. is anticipated to release the producer price index (PPI) data on Tuesday, with the consumer price index (CPI) following on Wednesday.
Also read: Gold and silver prices today on 13-05-2024: Check latest rates in your city
Gold prices are seen trading slightly lower today amid profit-booking and weighed by a stronger U.S. dollar, as focus turns on the U.S. inflation data and Fed’s Chairman’s comments later in the week. Currently, markets are pricing in about a 65-67% chance of a rate cut at Fed’s September meeting, any signs of cooling inflation would push those bets higher, but a higher reading would push back rate cuts expectation to possibly November meeting,” said Pranav Mer, VP – Research (Commodity & Currency) BlinkX and JM Financial.
What’s weighing on gold prices?
- The U.S. is anticipated to release the producer price index (PPI) data on Tuesday, with the consumer price index (CPI) following on Wednesday. According to a Reuters poll, median projections suggest that core consumer prices are expected to increase by 0.3% in April, down from the 0.4% rise recorded in March. This is anticipated to result in a decrease in the annual rate to 3.6%.
- Last week, gold saw an increase of over 1% after the release of weak jobs data, bolstering expectations of a potential U.S. rate cut within the year. According to the CME FedWatch Tool, traders are currently estimating a 63% probability of a rate cut in September. Lower interest rates diminish the opportunity cost associated with holding gold, which does not yield interest, thereby contributing to its attractiveness as an investment.
- Meanwhile, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated on Friday that the current economic conditions have left him uncertain about the future direction of monetary policy.
Also read: Oil suffers weekly loss on stronger US dollar, record-high Fed rates; Brent sticks to $82/bbl
In the realm of precious metals, spot silver saw a 0.4% increase to $28.27 per ounce, while platinum rose by 0.9% to $1,002.65 and palladium experienced a 0.5% uptick to $982.75.
Despite a structural deficit anticipated for platinum, palladium, and rhodium, Metals Focus predicts a decline in their average prices this year.
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Published: 13 May 2024, 09:40 PM IST
