In the early Asian session on Thursday, the price of gold (XAU/USD) has seen a modest gain, reaching nearly $2,450. This comes after a two-day losing streak, with the weaker US Dollar (USD) providing some support for the precious metal. Investors are now awaiting key economic data releases later in the day, including US Retail Sales, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production.
Recent data from the Labor Department revealed that inflation in the US rose as expected in July. The Consumer Price Index (CPI) increased by 0.2% month-over-month, resulting in an annual inflation rate of 2.9%. Similarly, the core CPI, which excludes food and energy, also rose by 0.2% month-over-month, with an annual rate of 3.2%, in line with market expectations.
Market strategist Phillip Streible noted that expectations for a 25 basis point rate cut by the Federal Reserve have increased, potentially impacting the momentum of the gold market. The Fed has hinted at easing monetary policy, but the exact timing and pace of rate cuts remain uncertain.
Geopolitical tensions and economic uncertainty continue to influence market sentiment, potentially boosting safe-haven assets like gold. Ongoing tensions, such as Iran’s response to calls for restraint following the assassination of a Hamas leader, could further support gold prices.
Analysis:
Gold prices are on the rise, supported by a weaker US Dollar and expectations of a rate cut by the Federal Reserve. Inflation data from the US has met market expectations, prompting investors to reassess the likelihood of future rate cuts. Geopolitical tensions and economic uncertainty are also contributing to the positive sentiment surrounding safe-haven assets like gold. As a result, investors may consider adding gold to their portfolios as a hedge against market volatility and inflation.