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Gold stays firm above $4,360 after softer US PPI cools Fed hike bets
US PPI inflation was flat month over month in July, cutting the odds of a September Fed rate hike to below 40% and supporting gold’s non-yielding appeal.
Gold prices held positive ground near $4,360 in early Asian trade on Friday, building on expectations that the Federal Reserve is less likely to raise rates next month after softer US inflation data, according to FXStreet.
FXStreet cited US Bureau of Labor Statistics data showing the headline Producer Price Index was unchanged month over month in July, weaker than the prior -0.1% reading and below consensus expectations of a 0.2% gain. The core PPI rose 0.2% month over month versus a 0.3% forecast, while the headline and core rates were up 4.7% and 4.2% year over year, respectively.
Money markets priced in less than a 40% chance of a September Fed hike, FXStreet said, noting that lower rate expectations can reduce the opportunity cost of holding bullion. The article also pointed to countervailing risks from Middle East tensions, including uncertainty around reopening the Strait of Hormuz, which could keep oil-driven inflation concerns elevated.
FXStreet added that TD Securities expects the Fed to remain on hold despite upside in energy prices, which it said should help anchor gold within a higher trading range. The technical picture in the piece showed gold capped below the 100-day moving average, with an RSI(14) reading of 62.72 indicating firm but not extreme bullish momentum.
Latest closeGold $4,408.20 ▼0.0%