Gold prices steady as US inflation data takes centre stage

GOLD held steady on Wednesday (Aug 14) as soft US producer prices reinforced hopes of an imminent interest rate cut, while trader focus shifted to US inflation print due later in the day for clues on the Federal Reserve’s next policy move.

Spot gold held its ground at US$2,465.27 per ounce, as at 0158 GMT. US gold futures edged 0.1 per cent lower to US$2,504.50.

US producer prices increased less than expected in July, data on Tuesday showed, reinforcing the market view that cooling inflation will allow the Fed to cut interest rates soon.

US consumer price index data for July is due on Wednesday and is expected to show month-on-month inflation edged up to 0.2 per cent. Retail sales data is scheduled for Thursday.

Traders expect about 54 per cent chance of a 50-basis-point interest rate cut in September by the US central bank, according to the CME FedWatch Tool, with an additional cut anticipated in December.

A low interest rate environment tends to boost non-yielding bullion’s appeal.

Atlanta Federal Reserve president Raphael Bostic said on Tuesday that recent data has made him “more confident” in reaching the 2 per cent inflation target, but he wants to see “a little more data” before he’s ready to support lowering interest rates.

Elsewhere, all Brazilian gold imports by Germany and 71 per cent by Italy come from areas of the Amazon where illegal mining is rampant, a think thank said, calling for increased European scrutiny.

Spot silver fell 0.15 per cent to US$27.80 per ounce, platinum edged 0.2 per cent higher to US$938.25.

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Palladium rose 0.18 per cent to US$940.25 after hitting its highest level since July 24 in the previous session. REUTERS