Asia’s gold prices remained unchanged as investors weighed the possible effect of weak U.S. inflation data on monetary policy. The decline in the consumer price index has increased the expectation that the Fed will reduce interest rates at its next policy session. Besides, investors were focusing on a top-level U.S.-Russia summit.
Gold Prices Steady As Traders Await Fed Clues
Recent American statistics indicate that consumer prices increased 0.2% in July, down from the rate in June. The Fed’s 2% target for inflation was gradually approached as annual inflation decreased to 2.7%. Analysts also claim that this drop makes the case for policy easing in September stronger. In general, non-yielding assets like gold are more appealing when interest rates are lower.
Furthermore, current market indicators indicate that there is a 90% chance of a rate cut. Spot gold saw its third consecutive day of gains, rising 0.4% to $3,367.53 an ounce. Gold futures in the US increased 0.3% to $3,416.70. Analysts therefore predict that additional technical buying may be triggered by a sustained push above $3,400.
Geopolitical Focus Shifts to Anchorage Meeting
Geopolitical developments are influencing market sentiment in addition to economic data. Russian President Vladimir Putin and US President Donald Trump meet in Anchorage on Friday. Discussions are likely to focus on the Ukraine conflict.
In addition, market commentators caution that a positive outcome could reduce safe-haven flows into gold. However, any breakdown could prompt investors to rush back into bullion, as uncertainty still looms over global growth trends.
Will Upcoming Events Decide the Gold Price Trend?
The upcoming weeks may be pivotal for bullion traders. New clues about the Fed’s interest rate policy will come from key U.S. data. This will include retail sales, unemployment claims, and the Producer Price Index. Additionally, any indications of economic cooling could raise anticipation of the Federal Reserve’s September easing.
However, the geopolitical environment is still dynamic. The Trump-Putin negotiations could have an impact on the market, especially on safe-haven assets. Diplomatic agreements may also affect gold prices, but they may also increase in reaction to increased tensions.
Right now, markets are using softer inflation data to offset political uncertainty. Given the recent low yields and the declining value of the dollar, the technical picture is still bullish. However, until the $3,400 barrier is convincingly broken, the market is probably going to stay in a wait-and-see position.
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