Gold futures edged higher on Tuesday, hitting a new front-month contract high, as U.S. producer price data showed continued mild inflation, adding to optimism about the path of the Federal Reserve to cut interest rates, sending U.S. Treasury yields lower and boosting stocks.
The overall PPI increase in July was smaller than expected by 0.1%, and the core PPI excluding food and energy was flat; monthly data showed that the total PPI increased by 2.2% year-on-year, compared with 2.7% in June; the core PPI rose by 2.4%, compared with 2.9% in June.
The dollar fell 0.4% against other currencies, making gold more attractive to holders of other currencies, while the benchmark 10-year Treasury yield fell 6 basis points to a one-week low of 3.85%.
According to Reuters, Alex Ebkarian of Allegiance Gold said, “Despite recent profit-taking, ongoing geopolitical tensions and recent market volatility, along with expected interest rate cuts, continue to drive investors toward safe-haven assets.”
If the July CPI release is in line with market sentiment, the upward trend could continue tomorrow.
Comex Gold for August Delivery (XAUUSD:CUR) is closed +0.1% to $2,466.70 per ounce, the fifth consecutive day of gains, with the front-month contract settling at a record high, while front-month August Comex silver (XAGUSD:CUR) settled -0.8% to $27.695 per ounce.
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According to Dow Jones, analysts at Commerzbank said geopolitical tensions in the Middle East and speculation about imminent U.S. interest rate cuts are providing impetus, although these impetus have weakened slightly in recent days.
The bank said that the release of the U.S. producer price index in July showed that factory-factory inflation slowed slightly from June. As inflation continues to subside, it strengthens expectations that the Federal Reserve will cut interest rates starting next month.
According to Dow Jones reports, ANZ analysts expect gold prices to hit $2,550 per ounce by the end of the year, with central bank purchases and physical demand supporting demand, rising gold imports from China and improving rural incomes and import tariff cuts in India to increase its gold consumption in the next few years. months.
ANZ added that any price weakness would increase gold’s appeal and limit downside, with investors also likely to hedge against market volatility caused by the U.S. election.