Gold Up 10% MTD as US Inflation Soothes Fed Rate-Hike Fears

GOLD led precious metals prices to new multi-week highs on Wednesday, peaking close to $4440 per ounce as betting that the Federal Reserve will raise US Dollar interest rates fell again following inflation data matching analyst forecasts.

With gold prices now adding 10% month-to-date in August, New York's stock markets rose back towards last week's new S&P500 records but European bourses were mixed, while US and other major Western government bond yields slipped further from this summer's multi-year highs.

"These backward-looking numbers kind of put the Fed in exactly the position they want to be," Reuters quotes one US fund manager.

"They don't have to do anything. We're seeing some cooling, but there's no collapse in the economy."

Following last Friday's surprise job losses on the non-farm payrolls report for July, today's Consumer Price Index matched Wall Street's consensus forecast, showing annual inflation of 3.4% on the headline measure and 2.5% on the 'core' CPI excluding fuel and food.

Market forecasts for year-end Fed rates dropped to the lowest since the US central bank's mid-June 'no change' decision, extending the inverse relationship to gold prices now running since the US-Israel war against Iran began at the start of March.

Today's consensus trade on CME Fed Funds futures predicted 3.88% per annum after the US central bank's December decision, only 1 rate-rise of 0.25 points above today's effective level.

The Dollar price of gold swung $85 within 5 minutes of the Bureau of Labor Statistics issuing its inflation report, dropping to a 6-hour low of $4390 before rebounding towards $4430 per troy ounce and then adding another $10 to set a fresh 10-week high.

Having snapped the downtrend in bullion prices, "The technical picture has now improved for both gold and silver," says analyst Rhona O'Connell at brokerage StoneX, pointing to 'support' from the precious metals' 50-day moving average prices at $4153 and $62 respectively, but resistance from the 200-day at $4500 and $71.

Silver had earlier peaked within 25 cents of $67 per troy ounce, its highest in 7 weeks, before dropping back almost $1 after the US inflation data.

Platinum came within $5 of $1800 and palladium briefly topped $1400 for the 3rd time in 4 sessions.

Crude oil meanwhile eased back after topping $90 per barrel of Brent for the first time in more than 2 weeks as Pakistan pushed to mediate in fresh talks between the US and Iran to re-open the Strait of Hormuz, the key oil tanker shipping lane which both Washington and Tehran now claim to control.

Pakistan also condemned yesterday's attack by Iran-backed Houthi rebels in Yemen on a commercial vessel in the Red Sea, killing 3 of its nationals.

With only 4 days remaining of the 60-day memorandum of understanding between the US and Iran, Lebanon meantime accused Israel of hindering its troops and the safe return of residents in the south of the country, while the Palestinian Authority spoke with the UK's new minister of state for the Middle East about Israeli settler violence in the West Bank and the humanitarian situation in Gaza.

Russia will retaliate against European-flagged vessels if the EU seizes more 'shadow fleet' ships in "nothing less than piracy and robbery" said President Putin today, also lambasting Japan for imposing economic sanctions against Moscow over its 4-year war on Ukraine.