Gold News prices experienced a dip during a volatile trading session on Wednesday after the release of U.S. consumer price data for July, which met expectations. This development has tempered hopes for a significant rate cut by the Federal Reserve in the upcoming month.
Spot gold dropped by 0.4%, reaching $2,455.91 per ounce by 1:38 PM GMT, while U.S. gold futures fell by 0.5% to $2,494.50. According to Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL), “When global tensions escalate, gold tends to become a preferred investment due to its reputation as a stable and reliable asset during uncertain times.” He noted that the ongoing conflicts in the Middle East and speculation over potential U.S. interest rate cuts have driven demand for gold, bringing prices close to record highs. Gold’s value is often seen as a hedge against inflation and currency devaluation, making it a crucial part of a diversified investment portfolio during periods of global instability.
The recent pressure on gold prices can be traced back to the U.S. Labor Department’s Bureau of Labor Statistics report, which showed a 0.2% increase in the Consumer Price Index (CPI) for July, following a 0.1% decline in June. Over the past 12 months, the CPI rose by 2.9%, slightly down from the 3% increase recorded in June.
Following the CPI data release, market sentiment shifted, with the estimated probability of a 50 basis point rate cut by the Federal Reserve in September dropping to 41% from a previous 50%, according to the CME FedWatch Tool.
Lower interest rates tend to reduce the opportunity cost of holding non-yielding assets like gold. Pranav Mer, VP of Research (Commodity & Currency) at BlinkX and JM Financial, observed that “Gold prices are trading steady to firm and holding near their all-time highs hit in July, as the U.S. dollar and treasury yields have declined amidst rising expectations for a Federal Reserve interest rate cut due to further signs of cooling inflation.”
So far this year, gold has risen by 19%, peaking at a record $2,483.60 on July 17, driven by strong safe-haven demand and anticipation of Federal Reserve action. Meanwhile, other precious metals saw declines, with spot silver down 0.2% to $27.77, platinum falling 0.6% to $930.25, and palladium slipping 0.4% to $935.31.
Table of Contents
Todays Gold News Rate in Dubai, 18, 22 & 24 Carat Gold Price on 15th Aug 2024
Gold Rate in Dubai Today (15th Aug 2024): Get 18K, 22 Carat & 24 Karat gold rate in Dubai & last 10 days gold price based on rupees per gram from GoodReturns.
Gold News 2024 Latest Updates
What is gold’s role as a safe-haven asset?
Gold is considered a safe-haven asset because it tends to retain its value or even appreciate during times of economic uncertainty, geopolitical tension, or market volatility.
How do interest rates impact gold prices?
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, often leading to higher gold prices as investors seek alternatives to fixed-income investments.
Why did gold prices drop after the U.S. CPI data release?
Gold prices fell because the U.S. CPI data met expectations, reducing the likelihood of a significant interest rate cut by the Federal Reserve, which would have otherwise boosted gold’s appeal.
What factors drive the demand for gold?
Factors include economic instability, geopolitical tensions, currency fluctuations, and inflation concerns, all of which can increase gold’s attractiveness as a store of value.
Why did U.S. consumer prices rise in July?
The rise in U.S. consumer prices in July was due to various factors, including increased costs for goods and services, which contributed to the overall inflation rate.
How does geopolitical tension affect gold prices?
Geopolitical tension often leads to increased demand for gold as investors seek a stable asset to protect against potential financial market disruptions.
What is the difference between spot gold and gold futures?
Spot gold refers to the current market price for immediate delivery, while gold futures are contracts to buy or sell gold at a predetermined price on a future date.
What is the Consumer Price Index (CPI), and why is it important?
The CPI measures the average change over time in the prices paid by consumers for goods and services. It’s a key indicator of inflation and influences monetary policy decisions.
Why is gold considered a hedge against inflation?
Gold is seen as a hedge against inflation because its value typically rises when the purchasing power of fiat currencies declines, preserving wealth over time.
What other precious metals are commonly traded alongside gold?
Alongside gold, other commonly traded precious metals include silver, platinum, and palladium, each with its own unique market dynamics and uses.