Gold futures on Thursday traded at their highest levels since mid-June, while silver touched its highest prices in two months, as the U.S. dollar tumbled following the release of June inflation data.
The U.S. June readings for wholesale prices released Thursday and the consumer price index on Wednesday showed a slowdown in inflation, raising the prospect that the Federal Reserve’s interest-rate hikes may soon be nearing an end.
Price action
-
Gold futures for August delivery
GC00,
-0.23% GCQ23,
-0.23%
gained $2.10, or 0.1%, to settle at $1,963.80 per ounce on Comex, with front-month prices finishing at their highest levels since June 16, according to FactSet data. -
Silver futures for September delivery
SI00,
+0.85% SIU23,
+0.85%
gained 64 cents, or 2.6%, to $24.95 per ounce, end at the highest since May. -
Palladium futures for September
PAU23,
-1.88%
increased by $12, or 0.9%, to $1,291.80 per ounce, while platinum futures for October
PLV23,
-0.13%
gained $26.80, or 2.8%, to $983.40 per ounce. -
Copper futures for September
HGU23,
-0.41%
gained 9 cents, or 2.3%, to $3.94 per pound.
Market drivers
U.S. wholesale prices rose by 0.1% in June, the government reported Thursday. That’s less than the 0.2% increase forecast by economists polled by The Wall Street Journal.
The data followed a modest 0.2% rise in June for the U.S. consumer price index, with the yearly rate of inflation slowing to 3% from 4%, on Wednesday.
Read: Fed’s Williams says economy won’t hit its weakest point until next year
U.S. consumer price inflation fell to its lowest level since 2021, allowing Treasury yields to fall sharply. Investors immediately heralded the report as a game changer that bolstered expectations that the Fed might only deliver one more interest-rate hike in July before leaving rates on hold until some time next year.
“A tame U.S. inflation report has the marketplace thinking the Federal Reserve may be about done raising interest rates. That’s bullish for commodity markets, including the metals,” said Jim Wyckoff, senior analyst at Kitco.
Dollar-denominated metals prices received another boost from a sharply weaker U.S. dollar, which has fallen to its lowest level against its main rivals in more than a year, according to the ICE U.S. Dollar Index
DXY,
a closely watched gauge of the greenback’s value. The index was off by nearly 0.7% at 99.866 in Thursday dealings.
Traders are expecting an end to interest-rate hikes, and the U.S. dollar index has “crashed,” said Chintan Karnani, an independent consultant who’s tracked the gold market for the last 20 years. Asian currencies have gained over the last two days versus the dollar all on the “expectations that the U.S. dollar is on the verge of forming a long-term top,” as future interest-rate hike expectations have declined considerably.
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