Gold Price Rallies as US Fed's Powell Boosts September Rate-Cut Bets
Wednesday, 7/10/2024 15:55
GOLD PRICES continued to rally on Wednesday, rising back towards last Friday's 6-week highs following weak Chinese inflation data as Hamas-Israel ceasefire talks continued despite a fresh order for civilians to leave Gaza City, while global stock and bond markets also gained following 'dovish' testimony to the US Congress from Federal Reserve chairman Jerome Powell.
Widely expected to hold Dollar interest rates at a 2-decade high yet again this month, "The economy has made considerable progress toward [our] 2% inflation goal," Powell said on Tuesday, the first day of his semi-annual appearance before US lawmakers.
"[So] the risks to achieving our employment and inflation goals are coming into better balance...[and]
elevated inflation is not the only risk we face.
"Reducing policy restraint too late or too little could unduly weaken economic activity and employment."
US crude oil stockpiles shrank more than analysts expected on last week's data, suggesting stronger demand among drivers and industry.
But Brent crude prices held near 3-week lows beneath $85 per barrel on Wednesday even as the US Energy Information Administration predicted that global oil demand will outstrip supply in 2025 on continued output cuts by the Opec+ cartel of producer nations.
Betting that the Fed will refrain from cutting rates in September today fell back to last Friday's 3-month low, putting the odds at barely 1-in-5 against late-May's level of evens, according to the CME derivatives exchange's FedWatch tool.
The gold price rose to $2386 per Troy ounce, regaining 1.5% from this week's earlier lows and less than 0.4% below Friday's peak, before edging back $10 to remain in the middle of its past 3 months' trading range.
Silver prices also rose before retreating, failing to hold above $31 per Troy ounce – an 11.5-year high when first reached in May – for the 3rd session running.
Rising bond prices saw longer-term borrowing costs fall to 3-week lows beneath 4.3% per annum on 10-year US Treasury debt, and European bourses added 0.6% for the day ahead of the New York stock market opening.
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But China and Hong Kong equities closed lower overnight, pulling the CSI300 index of Chinese stocks back towards Monday's 5-month low after new data said that consumer-price inflation in the world's 2nd largest economy slowed to just 0.2% per year in June.
Gold priced in the Yuan rose above ¥558 per gram on the Shanghai Gold Exchange, its highest price since the record highs of late May, as the Chinese currency fell to an 8-month low versus the Dollar on the forex market.
The sent the price of bullion landed in China – gold's No.1 mining, consumer and central-bank buying nation – jumping to $27 per ounce above London quotes, the largest incentive for new imports in a week and well over twice the 7-month low for Shanghai premiums seen on Monday after the People's Bank of
China said it didn't add to its bullion reserves for the second month running in June.
Data showing continued gold reserves accumulation by the Czech Republic, India and Poland has "eased concerns about a broader slowdown" in
central bank gold buying and holdings following that news, says senior commodity strategist Daniel Hynes at Australasian bank ANZ.
UK Pound gold prices were more muted, trading unchanged from this time last week around £1850 per Troy ounce, as Keir Starmer – Prime Minister in the new Labour Government – met with US President Joe Biden and other leaders from Nato to discuss the military alliance's financial and weapons support for Ukraine against Russia's invasion.
Euro gold briefly topped €2200 – like
today's UK gold price in Pounds, a new all-time high when reached in April.
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