Gold prices saw a modest increase on Wednesday, buoyed by growing uncertainty surrounding a U.S.-China trade agreement that has prompted some investors to seek safe-haven assets. Market sentiment was also influenced by cooler-than-expected U.S. inflation numbers, leading to heightened expectations that the Federal Reserve may begin to reduce interest rates as early as September.
As of 13:55 ET (1755 GMT), spot gold climbed 0.1% to $3,324.72 an ounce, having experienced an earlier increase of up to 1% during the trading session. Meanwhile, U.S. gold futures remained largely steady at $3,343.70. The Consumer Price Index showed a modest increase of 0.1% last month, a slight dip from April’s 0.2%, while year-on-year growth came in at 2.5%, which fell short of economists’ expectations of 0.2% monthly growth.
Tai Wong, an independent metals trader, explained that the lower-than-predicted core CPI data has rejuvenated interest in precious metals, particularly as bond yields and the dollar weaken. As traders evaluate a potential 68% likelihood of an interest-rate cut from the central bank in September, optimism is growing around gold and silver prices breaking out of recent resistance levels.
Amid discussions on the trade deal between the U.S. and China, President Trump indicated that an agreement is in place. This deal includes China supplying vital magnets and rare earth minerals, with the U.S. reciprocating by allowing Chinese students to attend American colleges.
Looking ahead, traders are anticipating the U.S. Producer Price Index data scheduled for release on Thursday, which may offer further direction ahead of the Federal Reserve’s meeting on June 17-18. Wong highlighted that for gold and silver to continue their upward trend, prices must surpass recent highs of $3,403 and $36.90, respectively. Failure to rally significantly could indicate a short-term correction.
In related market developments, platinum prices surged by 2.9% to reach $1,256.70, marking its highest level since 2021 at various points during the day. Despite this bullish trend in platinum driven by speculative and ETF demand, a sustained breakout may face challenges due to price-sensitive demand from China and potential increases in global supply, as noted by Goldman Sachs.
Meanwhile, spot silver slightly decreased by 1.2% to $36.11 per ounce, while palladium recorded a 1.3% gain, reaching $1,074.25.
This nuanced market could set a hopeful tone for investors looking into gold and precious metals, aligning with the Fed’s anticipated policy shifts.