Gold prices ended slightly lower on Thursday after the U.S. July inflation reading came in broadly as expected, but the precious metal fell for a third day under pressure from the higher bond yields and a firmer dollar of the past couple of weeks.
Price action
-
Gold futures for December delivery
SI00,
-0.35% GCZ23,
-0.24%
was off $1.70, leaving it nearly flat at $1,948.90 per ounce on Comex. -
Silver futures for September delivery
SI00,
-0.35% SIU23,
-0.35%
gained 9 cents, or 0.4%, to settle at $22.82 per ounce. -
Palladium futures for September
PA00,
-1.15% PAU23,
-1.15%
increased by $74, or 6%, to end at $1,305.50 per ounce, while platinum futures for October
PL00,
-0.47% PLV23,
-0.47%
rose by $22.10, or 2.5%, to finish at $914.80 per ounce. -
Copper futures for September delivery
HG00,
-0.32% HGU23,
-0.32%
lost 2 cents, or 0.5%, to settle at $3.77 per pound.
Market drivers
Gold prices initially firmed after the release of the U.S. inflation data, but those gains withered away as major stock indexes jumped with the Dow Jones Industrial Average up over 400 points in the morning trading before retreating.
“A peak in the dollar might be in place, but gold won’t be surging if Wall Street continues to buy up stocks,” said Edward Moya, senior market analyst at OANDA.
The U.S. dollar index
DXY,
a gauge of the greenback’s strength against major currencies, rose 0.1%, to 102.58. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
gained 7 basis points, at 4.08%, according to FactSet data.
The U.S. consumer-price index rose 3.2% in July from a year earlier, up from 3% in the year through June, the first increase in the headline rate in 13 months, but the core annual rate, excluding food and energy prices, slipped to 4.7% from 4.8%, the Labor Department said Thursday.
See: U.S. inflation rate creeps back up, CPI shows, but probably not enough to worry the Fed
“Crucially for the Fed, these figures are consistent with inflation moving lower towards its 2% target,” said Jamie Dutta, market analyst at Vantage. “Shelter costs remain a key wildcard but rent inflation should cool from an elevated pace in the months ahead, due to the typical lag associated with softer rents seen last year.”
However, Dutta said the importance of Thursday’s CPI report is “slightly diluted” as investors will get one final set of inflation data before the next Federal Reserve policy meeting in September. “Focus will also turn to Jackson Hole at the end of this month which could see Chair Powell confirm the Fed’s rate hike intentions,” he wrote in emailed commentary on Thursday morning.
Fed-funds futures traders currently price in a 9.5% chance of a September interest rate rise by the central bank, down from more than 20% a week ago, according to the CME’s FedWatch tool.
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