Currently, traders are closely monitoring the upcoming economic data to determine whether it will further bolster market expectations of the Federal Reserve's impending shift to a more accommodative monetary policy.
Following last week's 0.5% drop in gold prices, the current trading price is near $2,470 per ounce. Investors are preparing for the release of U.S. Producer Price Index (PPI) and Consumer Price Index (CPI) data, which will reveal the inflation trend in the world's largest economy.
While July's CPI data may show a rebound in price increases, the annual inflation rate is expected to continue growing at a slower pace. The recent easing of price pressures has given policymakers more confidence that they can start lowering borrowing costs while focusing on a labor market showing more signs of cooling.
Last Saturday, Federal Reserve Governor Michelle Bowman indicated that she still sees the risk of rising inflation and a robust labor market, suggesting she may be reluctant to support a rate cut in September. Typically, higher borrowing costs are unfavorable for gold because it does not pay interest.
So far this year, gold prices have risen nearly 19%, approaching the all-time high set last month. In addition to rate cut expectations, strong demand from central banks and robust Chinese consumer demand have also supported gold prices.
The escalation of tensions in the Middle East has further enhanced gold's appeal as a safe-haven asset.
According to a report released by Saxo Bank A/S on Monday, gold remains supported by geopolitical risks and anticipated Fed rate cuts, including conflicts between Iran and Israel and the situation in Ukraine.
However, the latest data from the Commodity Futures Trading Commission shows that fund managers' net-long positions in gold have fallen to their lowest level in five weeks.
Additionally, a survey by the New York Fed revealed that U.S. consumers' one-year inflation expectations in July were 2.97%, slightly lower than June's 3.02%; the median three-year inflation expectation significantly dropped by 0.66% to 2.3%, the lowest since June 2013. The New York Fed noted that compared to a year ago, consumers' perceptions of credit access worsened in July, with a higher proportion of households finding it more difficult to obtain credit. Moreover, consumers expect gasoline prices to rise by 3.46%, food prices by 4.67%, medical costs by 7.61%, college education costs by 7.15%, and rent by 7.14% over the next year.
Meanwhile, U.S. consumers' concerns about bill delinquencies are increasing, with the proportion of respondents who expect to be unable to make the minimum payment over the next three months rising to the highest level since the pandemic began. According to the New York Fed survey, the average likelihood of payment delinquency is 13.3%, the highest since April 2020. Those with an annual income below $50,000 and those with high school education or less face the greatest repayment pressure. The survey also showed that respondents' expectations for household expenditure growth have fallen to the lowest level in more than three years.
As of 02:38 Beijing time, the spot gold price is quoted at $2,470.14 per ounce, up 1.61%.
