Solid Gold Futures – Gold prices (XAU/USD) strengthened once more during Thursday’s trading (Oct 15), holding above US$4,150 per troy ounce. This gain was supported by a weakening US dollar—which retreated from an 18-month high—and a decline in US government bond yields, both of which enhanced the appeal of gold.
Market reaction to higher-than-expected US inflation data has begun to subside. The Consumer Price Index (CPI) for September showed annual inflation rising to 3.7% from 3.4%, while core inflation increased to 2.6% from 2.4% in August, indicating that price pressures remain broad-based.
Despite persistent inflation, the market anticipates that the Federal Reserve is unlikely to rush into an interest rate hike at its October meeting. San Francisco Fed President Mary Daly noted that further rate increases might still be necessary, though she provided no indication that such a move is imminent.
The decline in Treasury yields pressured the dollar, helping gold recover some of its earlier losses. However, rising energy costs remain a risk, as they could keep inflation elevated and reignite expectations for tighter monetary policy from the Federal Reserve.
Investors are now awaiting US Producer Price Index (PPI) data, which will offer further insight into inflationary pressures from the producer side. While a weaker dollar and geopolitical uncertainty may provide support for gold, volatility is expected to remain high leading up to the release of this data. (srh)