Gold prices dipped slightly on Wednesday, holding firmly above the key $2,500/oz level, despite the latest US inflation report all but quashing hopes of an aggressive Federal Reserve rate cut at its meeting next week. The US dollar firmed after the data, putting pressure on the precious metal, while investors awaited another inflation statistic due on Thursday.
At the close of New York trading, spot gold was down $5.50/oz from the previous session’s close, or 0.2%, at $2,511.50/oz, according to Kitco exchange data.
As of 7 a.m. Vietnamese time on Thursday (Sep 12), spot gold was up $0.80/oz from the US close, trading at $2,512.30/oz. Converted at Vietcombank’s selling rate, this global gold price was equivalent to about VND74.8 million/troy ounce, down VND500,000 from the previous morning.
Gold prices eased as expectations of a 0.5-percentage-point rate cut by the Fed all but evaporated.
A report from the US Department of Labor showed that core consumer price index (CPI) rose slightly more than expected, although the annual increase in the overall index fell to its lowest since February 2021. This data all but dashed investors’ hopes for a 0.5-percentage-point rate cut by the Fed next week.
According to the FedWatch Tool from the CME exchange, the market is now betting on an 86% chance that the Fed will opt for a 0.25-percentage-point reduction at its first rate cut on Sep 18, with only a 14% chance of a 0.5-percentage-point cut.
“Inflation is still there. Consumers are still feeling inflation. If the Fed cuts rates by half a point, it would be a sign of surrender in the fight against inflation. They will have to cut rates by a quarter point,” RJO Futures strategist Bob Haberkorn told Reuters.
The shift in rate expectations also pushed up the US dollar and US Treasury bond yields, adding further pressure on gold prices.
The Dollar Index, which measures the greenback against a basket of six major currencies, reached 101.83 points at one point on Thursday morning, its highest since mid-August, according to MarketWatch data.
The yield on the 2-year US Treasury note rose 6.8 basis points on Wednesday to 3.675%. The yield on the 10-year note climbed 2.9 basis points to 3.678%.
In a Reuters poll of 101 analysts, only nine expected the Fed to cut rates by 0.5 percentage points on Wednesday next week.
Following the CPI report on Wednesday, investor attention in the Thursday trading session will turn to another US inflation report, the producer price index (PPI).
The Fed’s move towards rate cuts is still supportive of gold prices, helping to maintain the important $2,500/oz psychological level. However, gold’s near-term breakout potential is low, as slower rate cuts could make investors more cautious.
“The rise in core CPI more or less reinforces the possibility of a 0.25-percentage-point rate cut by the Fed next week. Gold prices may have to wait a while longer to set a new record,” said independent precious metals trader Tai Wong, in an interview with Reuters.
Blue Line Futures chief strategist Phillip Streible said the rise in core inflation also meant “the number of Fed rate cuts will be reduced.” Speaking to Bloomberg, Mr. Streible opined that for gold investors, “the most important thing is how the Fed’s rate cut process will go. The road will become longer, and suddenly the Fed will cut rates fewer times. That will be a problem for the gold market.”
The strategist argued that with gold prices near all-time highs, “traders are a bit nervous, so they’re willing to take profits and get out of the market.”
Gold Prices Today, 9/8: SJC Gold Bars Retreat From Peak, Gold Rings Remain Sky-High.
Today, gold prices have dipped for SJC gold bars, while gold rings continue to soar at lofty heights.
Gold Bar Buying Service: SJC Gold Bars at an Unbeatable Price of 79.5 Million VND per Tael
As of today, larger enterprises are purchasing gold bullion at a fixed rate of 78.05 million VND per tael, whereas mid-range gold retailers are offering to buy gold at a rate that is 1 million VND higher per tael.
The Golden Opportunity: Unveiling the Latest SJC Gold Prices and Beyond
The morning of September 10 saw a stagnant domestic gold price, with no significant changes from the previous day’s rates. While the SJC gold price remained unchanged, gold ring prices only witnessed a slight increase of VND 50,000-100,000 per tael.
