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Gold steady as traders await US inflation data, palladium slides

July 10, 2023By Reuters

July 10 (Reuters) – Gold was little changed on Monday as investors awaited US inflation data that could influence the Federal Reserve’s policy stance, while palladium prices dropped below the USD 1,200-per-ounce level for the first time since December 2018.

Spot gold was steady at USD 1,925.30 per ounce by 01:49 p.m. EDT (1749 GMT). US gold futures settled 0.1% lower at USD 1,931.

“Gold has got some strong chart support at USD 1,900. If inflation remains hot, that might push gold below that level and prices might quickly drop to USD 1,848 level,” said Jim Wyckoff, senior analyst at Kitco.

The focus this week will be on US CPI (Consumer Price Index) data due on Wednesday after last week’s Fed minutes showed a vast majority of the policymakers expected further policy tightening.

Higher interest rates dull the appeal of gold, which pays no interest.

Bullion prices have dropped more than 7% since reaching near-record levels in early May as investors scaled back expectations of an end to the Fed’s rate-hiking cycle.

“Technical posture remains bearish for the gold market. I think it is going to take a geopolitical spark to push prices significantly higher,” said Wyckoff.

The Labor Department’s employment report on Friday showed the US economy added the fewest jobs in 2-1/2 years in June, but persistently strong wage growth pointed to still-tight labor market conditions.

Meanwhile, palladium dropped 0.2% to USD 1,241.41 per ounce after hitting a session low of USD 1,190.65.

Palladium has lost nearly 31% so far this year as the rapid rise of electric vehicles threatens to hammer demand for the autocatalyst metal amid broader economic weakness.

“If interest rates continue to rise, as futures markets are predicting, they will likely find US consumers’ pain point and sales should slow, dragging on palladium demand over the next 12 months,” Heraeus analysts wrote in a note.

Silver gained 0.4% at USD 23.14, while platinum rose 2% to USD 926.55.

(Reporting by Ashitha Shivaprasad and Brijesh Patel in Bengaluru; Editing by Nick Macfie and Shweta Agarwal)


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