Gold (XAU/USD) is trading above $2,400 on Thursday following the release of US Consumer Price Index (CPI) data for June, indicating a slowdown in inflationary pressures. This development increases the likelihood of the Federal Reserve (Fed) cutting interest rates soon, which is favorable for Gold as lower rates diminish the opportunity cost of holding non-interest-bearing assets.
Gold Surges Higher After US CPI Release
On Thursday, Gold prices surged after the US CPI data revealed a cooling economy, suggesting potential rate cuts by the Fed. In June, CPI rose by 3.0% year-on-year, below expectations of 3.1%. The month-over-month CPI decreased by 0.1%, contrary to the expected rise, according to the US Bureau of Labor Statistics.
Gold Rises as Powell Steers Middle-Way, Markets Predict Cuts
Gold gained momentum as Fed rate cut Chairman Jerome Powell indicated a cautious stance on interest rates during his recent testimony. Powell highlighted that current rates were effective in curbing inflation, but he acknowledged the potential for rate cuts as inflation trends lower.
Gold Buoyed by Central Bank Buying
Despite the People’s Bank of China halting Gold purchases in June, other central banks continued to bolster their Gold reserves. The Bank of India, National Bank of Poland, and Czech National Bank all increased their Gold holdings, reflecting ongoing global demand amidst economic uncertainties.
Technical Analysis: Gold Rising for Third Day
Gold has shown a bullish trend, supported by recent technical patterns indicating potential upward movement. The market anticipates further gains, with resistance levels at historic highs.
For more insights into Gold trends and updates, visit Daily Gold Signal. For daily Gold updates, check out their Gold Market Analysis.
