Gold futures experienced a decline for the third consecutive day on Wednesday as investors eagerly anticipated the release of the latest U.S. consumer-price inflation data. This came after data from China indicated that deflation has resurfaced in the world’s second-largest economy.
Price action
- Gold futures for December delivery (GC00, GCZ23) saw a decrease of $2.40, or 0.1%, bringing the price down to $1,957 per ounce.
- Silver futures for September delivery (SI00, SIU23) fell by 5 cents, or 0.4%, resulting in a price of $22.77 per ounce.
- Palladium futures for September (PA00, PAU23) experienced a decline of $7.60, or 0.6%, settling at $1,210 per ounce. Similarly, platinum futures for October delivery (PL00, PLV23) dropped by $5.10, or 0.6%, to $899 per ounce.
- Copper futures for September delivery (HG00, HGU23) increased by 2 cents, or 0.6%, reaching $3.79 per pound.
Market drivers
The upcoming batch of U.S. inflation data set to be released on Thursday has become a focal point for investors. The data could potentially shed some light on whether the Federal Reserve will raise interest rates again in September.
US Inflation Data and China’s Concerning Consumer Prices
The upcoming release of the latest US inflation data holds great significance for the Federal Reserve. This data will serve as a crucial reference point when the committee convenes next month to deliberate on whether to continue raising interest rates. The outcome of the meeting will largely depend on whether inflation is now on a downward trajectory, thus allowing the US central bank to maintain interest rates at their current level. This analysis was shared by Rupert Rowling, a market analyst at Kinesis money.
In a separate development, China released its latest batch of economic data on Wednesday, revealing a decline in consumer prices during July. This drop marks the first decrease in two years and raises concerns about the potential onset of deflation. Furthermore, this situation presents an additional challenge for China as it strives to recover from the impact of the COVID-19 pandemic.
China’s Consumer Prices Decline for the First Time in Over 2 Years
Gold prices have experienced a downward trend over the past week. This can be attributed to the rise in both the US dollar and global bond yields, especially Treasury yields. The ICE US Dollar Index (DXY) currently stands at 102.43, representing a 0.1% decrease. However, it has recorded an overall increase of 0.4% for the week.
On another note, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) has seen a modest increase of 1.1 basis points, bringing it to 4.032%.
Economists Expect Consumer Prices to Rise in July
According to economists surveyed by the Wall Street Journal, consumer prices are expected to have risen by 0.2% in July, which is consistent with the 0.2% increase observed in June. However, the June data was slightly below economists’ expectations, giving rise to optimism that the Federal Reserve may potentially taper its pace of interest rate hikes sooner than anticipated.
