Gold prices increased on Monday, finding some relief as the value of the dollar declined in anticipation of crucial inflation data to be released later this week. Additionally, copper prices surged due to positive Chinese inflation data.
Gold had experienced a significant drop the previous week, primarily due to concerns about persistent inflation and the likelihood of higher U.S. interest rates, which had strengthened the dollar. However, the dollar saw some profit-taking on Monday, which supported gold prices.
The main focus is now on the U.S. consumer inflation data for August, scheduled for release on Wednesday. It is anticipated that the inflation reading will show an increase from the previous month, potentially giving the Federal Reserve more reasons to maintain higher interest rates.
The most actively traded December gold on New York's Comex settled at $1,947.20 per ounce, up $4.50 (0.2%) for the day. The spot price of gold, which reflects actual physical trades, was at $1,922.51, up $3.16 (0.2%).
Impact of U.S. Inflation and Fed Meeting: A higher U.S. inflation figure could lead to more losses in gold prices, especially with a Federal Reserve meeting scheduled for the following week. Analysts expect the Consumer Price Index (CPI) inflation to have risen by 0.6% in August, accelerating from the 0.2% gain observed in July. While the Fed is expected to maintain interest rates in September, persistent inflation could compel the central bank to raise rates later in the year. Higher U.S. rates typically have a negative effect on gold, as they increase the opportunity cost of holding the non-interest-bearing asset.
Copper prices experienced a sharp 2.4% increase on Monday in New York futures trading, rebounding from a three-week low. This rise was attributed to improved Chinese inflation data. Data released over the weekend indicated that Chinese consumer inflation turned positive in August, while producer price inflation slowed down. This suggests the possibility of an economic recovery in China, the world's largest copper importer.
However, despite these positive indicators, other August economic data for China still portrays a mixed picture as the country grapples with a sluggish post-COVID recovery.
In summary, gold prices benefited from a weaker dollar, while copper prices rose due to optimistic Chinese inflation data. The focus remains on upcoming U.S. inflation data and its potential impact on gold prices.
Gold had experienced a significant drop the previous week, primarily due to concerns about persistent inflation and the likelihood of higher U.S. interest rates, which had strengthened the dollar. However, the dollar saw some profit-taking on Monday, which supported gold prices.
The main focus is now on the U.S. consumer inflation data for August, scheduled for release on Wednesday. It is anticipated that the inflation reading will show an increase from the previous month, potentially giving the Federal Reserve more reasons to maintain higher interest rates.
The most actively traded December gold on New York's Comex settled at $1,947.20 per ounce, up $4.50 (0.2%) for the day. The spot price of gold, which reflects actual physical trades, was at $1,922.51, up $3.16 (0.2%).
Impact of U.S. Inflation and Fed Meeting: A higher U.S. inflation figure could lead to more losses in gold prices, especially with a Federal Reserve meeting scheduled for the following week. Analysts expect the Consumer Price Index (CPI) inflation to have risen by 0.6% in August, accelerating from the 0.2% gain observed in July. While the Fed is expected to maintain interest rates in September, persistent inflation could compel the central bank to raise rates later in the year. Higher U.S. rates typically have a negative effect on gold, as they increase the opportunity cost of holding the non-interest-bearing asset.
Copper prices experienced a sharp 2.4% increase on Monday in New York futures trading, rebounding from a three-week low. This rise was attributed to improved Chinese inflation data. Data released over the weekend indicated that Chinese consumer inflation turned positive in August, while producer price inflation slowed down. This suggests the possibility of an economic recovery in China, the world's largest copper importer.
However, despite these positive indicators, other August economic data for China still portrays a mixed picture as the country grapples with a sluggish post-COVID recovery.
In summary, gold prices benefited from a weaker dollar, while copper prices rose due to optimistic Chinese inflation data. The focus remains on upcoming U.S. inflation data and its potential impact on gold prices.
