عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Gold Scales 2-week High as Fed Signals Likely Sept Rate Cut

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)
TT
TT

Gold Scales 2-week High as Fed Signals Likely Sept Rate Cut

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)

Gold prices hit a two-week high on Thursday as US Federal Reserve Chair Jerome Powell opened the door to cutting interest rates as early as September.
Spot gold was little changed at $2,445.39 per ounce, as of 0650 GMT, after hitting its highest since July 18 earlier in the session. Prices were just $38 shy of the record high of $2,483.60 scaled on July 17.
US gold futures firmed 0.7% to $2,490.10, Reuters said.
"The trend for gold remains bullish and prices should hit $2,500 this year as the Fed lowers interest rates," said Peter Fung, head of dealing at Wing Fung Precious Metals.
Fed Chair Jerome Powell said on Wednesday rates could be cut as soon as September if the US economy follows its expected path, putting the central bank near the end of a more than two-year battle against inflation.
Zero-yield gold tends to thrive in a low interest rate environment.
"Gold bugs may want to warrant some caution above $2,500, given gold's reluctance to hold onto gains around these levels," City Index senior analyst Matt Simpson said.
Market focus shifts to Friday's US payrolls report.
"If the data comes in much hotter than expected, that could dent gold as we head towards the weekend," Simpson added.
Elsewhere, Hamas leader Ismail Haniyeh was assassinated in the Iranian capital Tehran early on Wednesday morning, an attack that drew threats of revenge on Israel and fueled further concerns that the conflict in Gaza was turning into a wider Middle East war.
Geopolitics is increasingly more supportive for gold in the medium and long term, Nicky Shiels, head of metals strategy at MKS PAMP SA said in a note.
Spot silver fell 0.4% to $28.92, platinum lost 0.4% to $972.35 and palladium eased 0.2% at $923.60.
Key metals consumer China's manufacturing activity in July shrank for the first time in nine months, a private sector survey showed.

Most Viewed

 
 
Business

Euro Zone Inflation Edges up in 'Difficult Print' for ECB

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
TT
TT

Euro Zone Inflation Edges up in 'Difficult Print' for ECB

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights
A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights

Euro zone inflation unexpectedly edged up in July, data showed on Wednesday, although a widely watched gauge of price growth in the services sector eased.

Wednesday's figures did not seem to derail market expectations for an interest rate cut by the European Central Bank in September, but they were likely to strengthen concerns about a difficult last mile in the ECB's efforts to bring down inflation.

According to Reuters, price growth in the 20 countries that share the euro accelerated to 2.6% in July from 2.5% in June according to Eurostat's flash estimate.

A key measure of underlying growth in prices -- which excludes energy, food, alcohol and tobacco -- failed to show the expected decline and came in unchanged at 2.9%.

"It's a difficult print for the ECB," said Fabio Balboni, an economist at HSBC. "Disinflation on the goods side is coming to an end and services inflation remains high."

Still, Balboni stuck to his call for ECB cuts in September and December, as did investors in euro zone money markets, on expectations that inflation would eventually ease.

A general view of a fruit and vegetable stand on a weekly market in Berlin, Germany, March 14, 2020. REUTERS/Annegret Hilse/File Photo Purchase Licensing Rights.

"I still expect a second rate cut to come in September," said Kyle Chapman, a foreign exchange markets analyst at Ballinger Group. "I don’t think it matters too much if we get the odd data point that’s slightly stronger than expected."

Euro zone inflation has fallen a long way since briefly hitting double digits in late 2022, when it had been boosted in large part by a brisker-than-expected reopening of the economy after the COVID-19 pandemic and more expensive fuel in the wake of Russia's invasion of Ukraine.

But that progress has stalled in recent months as prices in the services sector got a boost from higher salaries.

In a small, positive sign for the ECB, services' price growth eased to 4.0% from 4.1% in June as an expected boost from the Olympics in Paris failed to materialise, with some consumers balking at what they saw as price-gouging.

"This kind of pushback bodes well for the medium term inflation outlook," economists at ABN-Amro wrote in a note.

The ECB has made clear it would not be swayed by individual data points and will focus instead on the broader trend for inflation, which it expects to bounce around current levels this year before pulling back towards its 2% target in 2025.

The central bank started cutting rates last month, paused in July and is widely expected to slowly dial back over the next 1-1/2 years some of the steepest hikes it has made in its 25-year history.