Gold edged higher on Wednesday following the release of U.S. inflation data, which alleviated concerns regarding imminent rate hikes. However, escalating tensions in the Gulf and a significant increase in oil prices maintained investor attention on the interest-rate outlook, thereby constraining gains in non-yielding bullion. Spot gold increased by 0.1%, reaching $4,056.69 per ounce as of 0108. U.S. gold futures for August delivery declined by 0.1%, settling at $4,063.80. Gold surged over 2% on Tuesday, recovering from a two-week low, following data that indicated U.S. consumer inflation decelerated more than anticipated in June as energy prices declined.
The moderation in inflation was, however, insufficient to persuade financial markets to fully price out a U.S. interest-rate increase this year, as renewed conflict in the Middle East fuelled concerns about higher energy prices and inflation. Oil prices continued to rise for a third consecutive session as U.S. President Donald Trump reinstated a naval blockade of all Iranian ports and issued threats to target power plants and bridges next week unless Tehran returns to the negotiating table, marking the latest escalation in the ongoing conflict. Top Federal Reserve officials welcomed cool inflation figures, but stated that they would require additional readings to feel assured that price pressures are genuinely easing.
A more comprehensive understanding of inflation in June will be revealed when the government releases its Producer Price Index later today. Traders currently estimate a 58% likelihood of a rate increase at the Fed’s September meeting, a decline from the previous 76% as indicated by data from the CME FedWatch Tool. Investors were on standby for China’s second-quarter economic data, as analysts anticipated a deceleration in growth, aligning with the lower spectrum of Beijing’s annual target. This trend could potentially suppress demand from one of the globe’s foremost gold consumers.
On the supply side, Ghana’s Gold Board indicated that artisanal and small-scale mining output was poised to match or surpass last year’s record, whereas South Africa experienced a 5.4% annual decline in mining output in May. In other markets, spot silver experienced an increase of 0.4%, reaching a price of $58.86 per ounce. Platinum increased by 0.3% to $1,636.28, while palladium experienced a slight decline of 0.1%, settling at $1,304.10. Citi Research maintained its price targets for the zero to three-month point at $1,950 per ounce for platinum and $1,500 per ounce for palladium.