CPI Cools, Gold Rebounds
Gold prices rose more than 1% in trading on Tuesday (July 14th) after lower-than-expected US inflation data came out. This data led the market to lower expectations for an imminent Fed interest rate hike.
Spot gold rose 1.2% to US$4,046.64 per troy ounce, after previously touching its lowest level since July 1st. Meanwhile, US gold futures rose 1.6% to close at US$4,069.70 per troy ounce.
Gold's rise was also supported by a 0.3% weakening of the US dollar. A weaker dollar makes gold cheaper for holders of other currencies, increasing the precious metal's appeal.
US CPI data showed annual inflation slowed to 3.5% in June, down from 4.2% in May. More importantly, the core CPI remained unchanged on a monthly basis, lower than expectations for a 0.2% increase. This figure signals that core inflationary pressures are easing.
Following the release of the data, market participants began to exit bets that the Fed would raise interest rates at its July 28–29 meeting. Consequently, gold received a boost, as the prospect of lower interest rates typically benefits non-yielding assets like gold.
Source: Newsmaker.id
