Gold Pressured by Easing Global Tensions, US Inflation in the Spotlight
Gold prices weakened in trading on Monday (August 11th) as easing geopolitical tensions reduced demand for safe-haven assets. Market participants are now shifting their attention to US consumer inflation data scheduled for release on Tuesday, which is expected to provide clues to the Federal Reserve's future interest rate policy. Spot gold fell 0.7% to $3,376.67 per ounce at 02:48 GMT, while US gold futures for December delivery fell 1.5% to $3,439.70.
Pressure on gold prices emerged following the announcement that US President Donald Trump would meet Russian President Vladimir Putin on August 15th in Alaska to negotiate a potential end to the Ukraine conflict. "The cooling of geopolitical tensions surrounding the war in Ukraine has caused gold to fall further," said Matt Simpson, senior analyst at City Index. This meeting has reduced market interest in safe-haven assets such as gold.
This week, the market will focus on US inflation data, which will determine expectations for the Fed's interest rate. Analysts expect the core consumer price index to rise 0.3% month-on-month, reaching an annual rate of 3.0%, falling short of the Fed's 2% inflation target. "If inflation data is hotter than expected, the dollar could strengthen and limit gold's gains," Simpson said. However, he added that investor interest in buying gold at a discount remains high.
Meanwhile, recent weak US jobs data has increased speculation of a Fed interest rate cut. The market now rates about a 90% chance of a rate cut in September, as well as the potential for additional cuts before the end of the year. A low interest rate environment typically benefits gold because the precious metal offers no imbalanced yields, making it an attractive alternative when yields fall.
Meanwhile, market participants are also closely monitoring developments in negotiations between the US and China, ahead of Trump's scheduled August 12th meeting. In other metals markets, spot silver fell 0.8% to $38.02 per ounce, platinum weakened 0.9% to $1,320.45, and palladium edged down 0.3% to $1,122.69. CFTC data shows that COMEX gold speculators increased their net longs by 18,965 contracts to a total of 161,811 in the week ending August 5, indicating that medium-term optimism remains. (alg)
Source: Newsmaker.id
