Image courtesy of Pxfuel.
Gold was little moved on Tuesday following fresh US inflation data that bolstered the likelihood of a Federal Reserve rate cut in September.
Spot gold stayed flat at $3,344.63 per ounce as of 11:20 a.m. ET, trading within a narrow range of $3,331.70-$3,357.70 for the day. US gold futures, meanwhile, went 0.4% lower at $3,391.9 per ounce.
New data released by the Bureau of Labor Statistics showed that the US consumer price index rose 0.2% in July, in line with expectations. According to analysts, this inflation reading gives fresh ammunition to those betting that the Fed will resume rate cutting as soon as next month.
“Overall inflation is not rising as rapidly as expected, likely because nominal growth remains sluggish. For the Fed, July’s CPI data likely cements a September rate cut,” Neil Dutta of Renaissance Macro Research said.
“In essence, this inflation print supports the narrative of an insurance rate cut in September, which will be a key driving force for the markets,” echoed Alexandra Wilson-Elizondo at Goldman Sachs.
Crisis averted
Gold prices had dropped more than 2% on Monday afternoon after US President Donald Trump confirmed that the metal would not be subject to tariffs, averting a potential crisis in the global bullion market.
A gold tariff would have been especially harmful for Switzerland, a major refining and transit hub for bullion, due to the heavy 39% levy the US had placed on its goods.
The uncertainty surrounding whether gold would be tariffed caused US gold futures to surge to a record on Friday, and traders said that shipments were freezing up in response to the shock news.
“Delighted to hear the crisis has been averted,” said Ross Norman, an independent gold market analyst. “It will come as an enormous relief to the bullion markets, as the potential for disruption was incalculable.”
(With files from Bloomberg and Reuters)