Gold Futures Lower as Investors Await Fed’s Inflation Data

by webmaster

Gold futures were marginally lower early Thursday as investors awaited a reading of the Federal Reserve’s preferred inflation indicator.

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Price Action

  • Gold for December delivery GC00, -0.09% GCZ23, -0.09% was down $1.90, or 0.1%, at $1,971.10 an ounce, after ending Wednesday at its highest since Aug. 4.
  • December silver SIZ23, -0.71% fell 14.4 cents, or 0.6%, to $24.59 an ounce.

Market Drivers

Investors were awaiting the release of the July personal consumption expenditures index at 8:30 a.m. Eastern. The core reading has been cited as the Fed’s preferred measure of inflationary pressures.

Analysts surveyed by The Wall Street Journal, on average, forecast the core PCE to have risen 0.2% month-on-month, the same as in June, and for the annual rate to be 4.2%, against June’s 4.1%.

Gold has found support this week after weaker-than-expected labor data, including Tuesday’s job openings and labor turnover survey, or JOLTS, report and Wednesday’s private-sector payroll figures from Automatic Data Processing came in weaker than expected. The main event, however, is likely to remain Friday’s August jobs report, analysts said.

Gold was buoyed as the data saw investors scale back expectations for a further Fed rate increase, which allowed the U.S. dollar and Treasury yields to pull back. A higher dollar can make gold more expensive to users of other currencies, while higher bond yields raise the opportunity cost of holding assets that don’t produce a yield.

“Should the U.S. labor market give more signs of weakness, there may be scope for further gold gains. However, even in the medium-to long-term, these gains will be limited because even if the Fed doesn’t hike again, rates will remain elevated for a prolonged period,” Ricardo Evangelista, senior analyst at ActivTrades, said in a note.

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