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Gold steady as investors stand by for US inflation figures

July 13, 2022By Reuters

July 13 (Reuters) – Gold prices steadied near an over nine-month low on Wednesday, as investors cautiously awaited US inflation data for cues on the road ahead for the Federal Reserve’s monetary policy.

Spot gold was flat at USD 1,725.84 per ounce at 0754 GMT, after touching USD 1,721.98 earlier in the session, its weakest since late-September. US gold futures dipped 0.1% to USD 1,723.60.

“Traders are teetering on the edge of their seats ahead of US CPI,” and currency and gold investors are probably executing on a need-only basis, said Stephen Innes, managing partner at SPI Asset Management.

The US Labor Department’s June Consumer Price Index (CPI), due later in the day, is expected to have accelerated on both a monthly and annual basis, by 1.1% and 8.8%, respectively.

Barring a major surprise, the CPI data could coalesce investors’ expectations for a 75-basis-point interest rate hike by the Fed later this month, as the US central bank seeks to rein in inflation.

With the market convinced the Fed will go with the jumbo hike at its July meeting, it feels like long positions in gold are still swimming upstream, but data showing inflation has peaked could mitigate rate-hike pressure and gold should catch a small flyer, Innes said.

Although gold is seen as an inflation hedge, higher rates draw investors away from zero-yield bullion.

The dollar firmed near 20-year highs, continuing to make greenback-priced gold less attractive for buyers holding other currencies.

Benchmark US 10-year Treasury yields were steady.

Gold will rally from time to time as investors and traders try to pick the bottom, but the market will likely continue to stay flat/trend lower with a strengthening US dollar, said Michael Langford, director at corporate advisory AirGuide.

Spot silver rose 0.5% to USD 18.98 per ounce, platinum fell 0.5% to USD 841.74, and palladium dropped 1% to USD 2,005.24.

(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Rashmi Aich, Sherry Jacob-Phillips and Krishna Chandra Eluri)

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