Gold News

US Inflation and Chinese PMI Data Leave Gold, Silver Prices Near 1-Month Highs

NEW U.S. INFLATION data left gold and silver prices unmoved Thursday in London, with FX and equity markets also little changed after the cost of living on the PCE measure came in matching analysts' consensus forecasts.
Gold settled in Shanghai set another new record in Chinese Yuan overnight as PMI economic activity surveys said the world's 2nd largest economy continues to stall.
Bullion priced in the Dollar meantime held $5 per Troy ounce below yesterday's 4-week high of $1949, while silver prices edged back towards $24.50, down by 50 cents from Wednesday's spike to the highest since late last month.
US inflation excluding food and fuel on the personal consumption expenditures index – the Federal Reserve's preferred measure – accelerated 0.1 points in July from June's 21-month low of 4.1%, still twice the Fed's 2.0% target for core PCE inflation.
With overnight interest rates now raised to a ceiling of 5.5% per annum, "We see the current stance of policy as restrictive," said the Fed's chairman Jerome Powell last week in his annual address to the Jackson Hole central bank symposium in Wyoming, "[and] we are committed to...sustaining [that] to bring inflation down."
"This suggests that Fed Funds have peaked," notes bullion-market analyst Rhona O'Connell at brokerage StoneX, "[which] should be supportive for the gold and silver price."
Chart of US effective Fed Funds rate (blue) vs. core PCE inflation. Source: St.Louis Fed
"We are buyers of gold on weakness or declines in rates," said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a note Monday.
Gold-backed ETFs "have been seeing outflows," says Tamara Stats, lead ETF strategist for iShares, the exchange-traded product division of giant asset management group BlackRock.
"But that [ETF] selling seems to have troughed recently, so we're watching that pretty closely [as] precious metals and commodities have been pretty unloved after having a pretty great 2022."
The giant GLD gold ETF expanded for a 3rd session running on Wednesday, while iShares' IAU also expanded 0.1% for the day.
Thursday found global stock markets also little moved by the US PCE inflation data, holding at Wednesday's 3-week closing high on the MSCI World Index.
But major economy bond prices had already risen – edging longer-term US Treasury, German Bund and UK Gilt yields down to 3-week lows – as yesterday's softer-than-expected US data was followed by China's NBS PMI surveys for August saying that services-sector growth has slowed again while its giant manufacturing sector continues to contract.
This month's first estimate for inflation across the 20-nation Eurozone showed a small uptick, with 'core' prices slowing to a 5.3% annual increase.
Jobs and retail sales data for Germany – the world's 4th largest national economy, almost 50% larger than Euro-area No.2 France – both came in worse than forecast.
The "tumble" in US Treasury yields following Tuesday's big miss in US job vacancies data had "accelerated the moves" in most asset classes "amidst thin [summer] liquidity and clearly still largely net short metals markets," said a note from strategist Nicky Shiels at Swiss bullion refining and finance group MKS Pamp.
Speculative traders in Comex silver derivatives last week held the most bearish position as a group, net of their bullish bets, since the eve of March's mini-crisis in UK regional banking.
Silver priced in the Dollar has risen almost 5% since then.
The UK gold price in Pounds per ounce meantime held close today to Tuesday's 6-week high of £1537, while the Euro gold price touched its highest in August above 1792 following the Eurozone inflation and German economic data.


Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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