3 weeks ago
Gold Climbs Above $4,400 as Traders Eye US Inflation
Gold is a shiny metal that people like to buy when they feel worried about money.
Right now, one ounce of gold costs more than $4,400.
That is the highest price it has been in two months.
Gold got more expensive because traders are excited about new numbers coming out about how much prices are going up.
Soon, the government will share a report about rising prices.
If prices rise too fast, the country's central bank might make borrowing more expensive.
Some leaders at that bank say they may need to raise rates several times.
Gold is also higher because some people are worried about a war with a country called Iran.
Still, gold costs about 17% less than it did before that war started.
Gold advanced to a two-month high above $4,400 an ounce ahead of a key US inflation report.
Bullion gained 3.6% over the previous two sessions, helped by technical buying after climbing through the 100-day moving average and inflows into gold-backed exchange-traded funds in China.
The July consumer price index is expected to rise 0.1% following a 0.4% decline the prior month, according to a Bloomberg survey of economists.
President Donald Trump hardened his stance on Iran, making a deal to reopen the Strait of Hormuz less likely; gold remains about 17% below levels before the Iran war began in late February.
Cleveland Fed President Beth Hammack said a number of rate hikes by the Federal Reserve may be needed to bring inflation to the central bank's 2% target.
- Who
- Gold traders and investors, US President Donald Trump, Fed Chairman Kevin Warsh, Cleveland Fed President Beth Hammack, and Vantage Markets analyst Hebe Chen.
- What
- Spot gold climbed to a two-month high above $4,400 an ounce ahead of the upcoming US inflation report.
- Where
- Spot gold was quoted at $4,410.92 an ounce in Singapore; the policy debate concerns the United States and the Federal Reserve.
- When
- The US inflation report is due Wednesday; spot gold traded at $4,410.92 an ounce at 8:38 a.m. in Singapore.
- Why
- Traders are positioning ahead of US inflation data and possible Federal Reserve rate hikes, buoyed by technical buying, inflows into Chinese gold exchange-traded funds, central bank purchases, and heightened US-Iran tensions over the Strait of Hormuz.
Expectation of Moderate Inflation
Expectation of Further Rate Hikes
Federal Reserve rate path
Expectation of Moderate Inflation
A weak jobs report and the projected modest 0.1% rise in July CPI could ease inflation anxiety and reduce pressure on the Fed to raise rates.
Expectation of Further Rate Hikes
Higher energy prices and President Trump's hardening stance on Iran could add inflationary pressure, with Cleveland Fed President Beth Hammack saying a number of rate hikes may be needed to hit the 2% target.
Trump's conversations with the Fed chairman
Expectation of Moderate Inflation
Trump downplayed his talks with Fed Chairman Kevin Warsh, saying he had spoken to him only once, briefly, since Warsh took the role in May.
Expectation of Further Rate Hikes
The subject had raised fresh questions about whether Trump was seeking directly to influence the central bank.
Key facts
- Spot gold price
- $4,410.92 per ounce (+0.5%)
- Two-session gain
- +3.6%
- Silver price
- $65.98 per ounce (+0.4%)
- Expected July US CPI
- +0.1% after a 0.4% decline in the prior month
- US CPI release
- Wednesday, per Bloomberg survey median projection
- Fed inflation target
- 2%
- Gold vs. pre-Iran-war levels
- About 17% lower
- Fed dissents
- Three officials, including Beth Hammack, dissented against holding rates steady last month
Quotes
Hebe Chen
Analyst at Vantage Markets, Melbourne
“The tangled pieces around gold are finally starting to move into place, giving this recovery the shape of an early‑stage shift into a new cycle.”
livemint.com
Sources
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