Gold steadied, as traders weighed softer-than-expected inflation data against escalating attacks in the Middle East for clues to the Federal Reserve’s interest-rate path.
Event Context
Bullion was near $4,060 an ounce in early trading, after ending the previous session up 0.2%. The Bloomberg Dollar Spot Index and Treasury yields fell on Wednesday after an underlying gauge of US producer price inflation showed pressures were abating before the latest flare-up in the Iran war.
Player Focus
The June numbers, however, didn’t reflect the latest round of hostilities. An interim peace deal signed last month has all but collapsed, with Washington launching airstrikes for a fifth consecutive day and President Donald Trump pledging to intensify the bombardment until Tehran stops attacking ships and opens the Strait of Hormuz.
Team Analysis
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Match Outlook
Gold has traded close to $4,000 an ounce in recent weeks after losing 14% in the second quarter, its worst showing since 2013. That retreat was driven by expectations the Fed could hike interest rates to manage inflationary pressures driven by the war, creating headwinds for non-yielding bullion.
The unexpectedly sharp slowdown in June inflation has perhaps bought the US central bank more time to consider its options. However, with the conflict heating up again, any reprieve may prove short-lived. Oil climbed for a fourth day on Thursday.
Fed Chairman Kevin Warsh has made it clear that rates are among the options to keep inflation within a promised 2% target but has tempered hawkish comments with a willingness to be patient. In an exchange with lawmakers Wednesday, he pushed back on commentary that surging investment into artificial intelligence is stoking inflation.
Spot gold was little changed at $4,060.30 an ounce at 6:45 a.m. in Singapore. Silver was also steady, at $57.81 an ounce. Platinum gained, while palladium fell marginally. The Bloomberg Dollar Spot Index was flat after dropping 0.3% in the previous session.
