Gold prices experienced a significant rise on Thursday, breaking a recent decline wave due to a dip in the dollar and US Treasury bond yields. This increase comes as investors are keenly awaiting further US economic data that may influence interest rate expectations following a recent inflation report.
Spot gold transactions saw an uptick of 0.36%, reaching $2,456.86 per ounce, while US gold futures climbed 0.57% to $2,493.90. The recent decline in the dollar and 10-year Treasury bond yields contributed to this upward movement, marking a shift in market sentiment.
Analyst Yip Jun Rong noted that the prospect of lower interest rates has led to profit-taking in the gold market, as the data revealed a slight rise in the US consumer price index for July. Notably, the annual inflation increase has slowed to below 3% for the first time since early 2021, opening the door for potential Federal Reserve interest rate cuts next month.
Currently, markets are estimating a 36% chance of a 50 basis point cut in September, down from 50% prior to the CPI data release. A reduction in interest rates would enhance the appeal of non-yielding gold, making it a more attractive investment option in uncertain times.
