Gold down as investors anticipate U.S. inflation report

The direction of gold investors seems to remain uncertain. Now, investors are awaiting the U.S. inflation report which is believed to provide a bit of clarity as to where the Federal Reserve’s (Fed) monetary policy is heading.

Yesterday, the 10-year Treasury yield declined to 1.5% for the first time in a month. This decline was caused by a strong auction. This suggests that the Fed’s assurances of elevated inflation being temporary is gaining acceptance from investors.

Investors are also anticipating the European Central Bank’s decision regarding policymakers having all the evidence they need to keep in place their ultra-loose monetary stimulus later today, thanks in part to their opposite numbers at the Fed.

Gold has been marginally bearish this week with investors focusing on inflation, speculating on the possibility that the Fed will start discussions about tapering asset purchases. Today’s U.S. Consumer Price Index report will be one of the last major economic indicators before the Fed’s next policy meeting on the 15th and 16th of June 2021.

James Steel, chief precious metals analyst at HSBC Securities (USA) Inc. stated, “The inflation data may be more important, and gold influenced by it more than usual, because of the Fed blackout ahead of the June FOMC meeting. A higher reading may trigger a rise in yields and weigh on gold, especially if it supports the U.S. dollar.”

The Price of Gold climbed to $1,916.64 per ounce last week, the highest intraday level since January 2021. Silver and palladium both ticked higher, while platinum steadied.

Gold is currently down 0.75%, trading at $1,881.50 per ounce while the dollar index, which usually trades inversely with Gold is currently up 0.13%, trading at 90.235.

On the coronavirus front, the Group of Seven leaders (G7) is set to vow to deliver at least 1 billion extra doses of vaccines over the next year to help cover 80% of the world’s adult population, according to a draft communique seen by Bloomberg News.

Silver is currently down 0.94%, trading at $27.735, Palladium is also down 0.17%, trading at $2,768 and Platinum is down 1.12%, trading at $1,138.85.


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