Gold rises as European inflation data undermines dollar

Gold inches higher ahead of critical inflation report

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Gold prices inched higher on Wednesday but remained stuck around the $1,730 level as investors awaited a key reading on inflationary pressures in June. The yellow metal had settled higher for a second session on Tuesday.

Price action
  • Gold futures

    for August delivery climbed $4.10, or 0.2%, to $1,728.

  • Silver futures

    for September delivery declined by seven cents, or 0.4%, to $18.89 per ounce.

  • Platinum futures

    for October delivery inched lower, losing $2.30, or 0.3%, to $825 per ounce.

  • Palladium futures

    for September delivery fell $44, or 2.2%, to $1,971.

  • Copper futures

    for September delivery fell 2 cents, or 0.5%, to $3.27 per pound.

Analyst reaction

Wednesday’s inflation number could have a major impact on the precious-metals market, since a hotter-than-expected headline number could pressure the Federal Reserve to hike interest rates more quickly.

This, in turn, could drag both the dollar and Treasury yields higher. Since gold hit its 2022 peak above $2,000 per ounce in March, the strong dollar and higher Treasury yields have lured investors away from gold and into other “safe haven” assets that offer a yield.

“Another bout of US Dollar strength could well see $1675.00 fail, setting up another capitulation trade,” said Jeffrey Halley, senior market analyst for Asia-Pacific at Oanda.

The ICE U.S. Dollar Index
a gauge of the buck’s strength against a basket of rivals, was modestly lower on Wednesday, while the Treasury yield curve continued to invert as short-term yields climbed while longer-duration yields fell. The spread between the two-year

and 10-year Treasury

stood at negative 8.4 basis points.

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