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The international gold price fell slightly

On August 9, the international gold price fell slightly. Investors awaited upcoming U.S. inflation data for further clarity on the outlook for the Federal Reserve's monetary policy. Unexpectedly weak inflation data could boost gold prices in the short term, but multiple factors still dampen bullish sentiment and limit further gains.

At 15:03 Beijing time, spot gold fell 0.16% to US$1,785.82 per ounce; the main COMEX gold futures contract fell 0.17% to US$1,802.1 per ounce; the US dollar index fell 0.06% to 106.312.


U.S. consumer price data for July will be released at 20:30 Beijing time on Wednesday (August 10). The market expects that the annual rate of U.S. inflation in July will drop 0.4 percentage points from the previous value to 8.7%. Gold is seen as an inflation hedge.

The data will influence Fed rate hike expectations and play a key role in driving short-term dollar demand, which in turn should help determine gold's next move. If the upward pressure on prices eases, it is expected to weaken the prospect of a substantial rate hike by the Federal Reserve. Higher interest rates would reduce the attractiveness of gold, a non-yielding asset. The interest rate futures market is pricing in a 64.5% chance of a third straight 75 basis point rate hike by the Fed at its next policy meeting in September.

Clifford Bennett, chief economist at ACY Securities, said: "Investors understand that both the U.S. and global economies face significant challenges, but the focus is on the length of time that interest rate hikes will have an impact on the market. If the U.S. inflation data for July is unexpectedly weak, it could become a The catalyst for a massive surge in gold prices.”

But TD Securities strategists expect gold's rally to largely reverse, "although the market is pricing in a 75bps hike in September, it's far from a certainty... Short covering after the Fed's July meeting may have already Losing momentum, especially with stronger economic data...July nonfarm payrolls report quickly capped the rally. Proprietary traders still hold heavily long positions, and continued strong economic data could be the trigger for a market pullback In that sense, we expect that the recent rally in gold prices will eventually fade.”

U.S. consumers' expectations for one- and three-year inflation levels fell sharply in July, a survey released by the New York Fed showed on Monday (August 8), suggesting the central bank is winning the fight against inflation.

Nonetheless, multiple factors could dampen bullish sentiment and limit further gains in gold prices. The U.S. non-farm payrolls report for July showed that the U.S. economy added 528,000 jobs that month, far exceeding expectations. In addition, the higher-than-expected wage growth data suggested that the Fed would find it difficult to slow the pace of rate hikes.

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