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Precious metals were positive on Wednesday afternoon, following US CPI figures coming in lower than expected at about 8.5% for July, down from more than a 40-year high of 9.1% in the previous month.
This caused gold to rise about 0.5% to $1803 per troy ounce, as investors speculated that the US Federal Reserve may finally slow down its aggressive monetary tightening policy. Markets are now pricing in a 62.5% chance of a 50-basis-point hike at the September FOMC meeting, up from 32% yesterday.
Gold crossed the critical $1800 per troy ounce level
Is US inflation really falling? Analyst's take and implications for metals
According to Piero Cingari, analyst at Capital.com, “Following the publication of the July US CPI report, traders lowered their expectations for upcoming interest-rate increases. As of now, September Fed futures rates indicate rates at 3.05%, suggesting a higher likelihood of a 50-basis-point increase rather than a 75-basis-point one. The Fed funds rate is expected to be around 3.6% by the end of the year, with rate hikes stopping after that.
Markets seem to have overreacted today by believing inflation has plateaued and is declining, as wished by the Fed. A closer look of the July CPI report reveals that inflationary pressures in non-energy items remain quite strong. As a result, calling for a Fed policy shift may be a little premature here.
But for the time being, a weaker US dollar (DXY) and lower US Treasury yields are giving the metal complex a boost.”
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Metals market performance
Silver rose 1.3% to $20.7 per troy ounce, still trading strongly above the critical $20 per troy ounce. The precious metal crossed the previous one-month high of about $20.3 per troy ounce seen a few days back, to hit a fresh high, mirroring gold.
Platinum inched up 0.7% to $937 per troy ounce, following continuing shortages of the precious metal due to increased sanctions causing delays in Russian shipments over the last few weeks. Palladium was similarly boosted, rising about 0.8% to $2224 per troy ounce.
Copper edged up 1.5% to $3.6 per pound, following Chinese factory gate inflation dropping to a 17-month low, while reserves at Shanghai Futures Exchange warehouses dropped about 79% to a seven-month low. Iron ore inched up slightly from CNY 771 to CNY 772 per tonne, following Chinese steel margins improving. Aluminium prices dipped 0.8% to $2444 per tonne.
The US dollar (DXY) fell from $105.9 in the previous trading session to $104.6.
The US Treasury yields dropped 6 basis points to 2.72% from 2.78% in the previous trading session.
Top mining ETFs and mining stocks
The Van Eck Gold Miners ETF (GDX) rose more than 2% this week
Top mining ETFs and mining stocks
The Van Eck Gold Miners ETF (GDX) inched up 0.6% to $27.1, with a weekly rise of about 2.4%.
The Van Eck Junior Gold Miners ETF (GDXJ) rose 0.7% to $34.6, increasing about 1.5% over the past week.
The S&P Global Metals and Mining ETF (XME) edged up 1.7% to $50.1, rising 2.7% in the last week.
Glencore (GLEN) inched up 0.5% to GBP 4.6, following the company’s shareholders getting a windfall $4.5 billion spurred by rising coal prices.
Rio Tinto (RIOgb) advanced 0.3% to AUD 99.4, following the AutoHaul system extension in Pilbara, Western Australia.
Antofagasta (ANTO) dropped 0.8% to GBP 11.8, following ongoing production issues.
Anglo American (AALI) inched up 0.5% to GBP 29.3, following the company focusing more on green hydrogen production.
Today’s market moving events
US CPI data for July showed a decrease to 8.5%, from 9.1% in June. This missed market consensus estimates of 8.7%. Core inflation year-on-year for July was also lower than expected, at 5.9%, instead of the market consensus of 6.1%.
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