A worker lifts a gold bullion bar from a conveyor machine at the Rand Refinery Ltd. plant in Germiston, South Africa, on 16 August 2017. (Photo: Waldo Swiegers / Bloomberg via Getty Images) “Gold has not been living up to its reputation as an inflation hedge and safe haven in times of crisis of late,” Commerzbank AG analyst Carsten Fritsch wrote in a note. “Although inflation rates in the US and Europe are higher than they have been for decades, and have been rising further recently, the gold price has been under selling pressure for weeks.”
Investors are awaiting the Federal Reserve’s meeting on July 26 and July 27 for a hint on how aggressive the central bank will be in raising interest rates to tackle searing inflation. For now, the latest US data reinforce policy makers’ support for another 75-basis-point hike, according to Bloomberg Economics.
“The Fed might not need to tighten policy as aggressively as markets were initially thinking, but the rate-hiking cycle could last into early next year,” said Edward Moya, senior market analyst at Oanda Corp. “The dollar is weakening to start the trading week, but this might not be the top, which means gold might struggle to make a move above anywhere close to the $1,750 level.”
Silver crept up as signs showed for more growth. “China is bidding up silver. In line with evidence of a Chinese bid in industrial metals, silver is benefiting from a continued rise in Chinese interest for the white metal,” Bart Melek, global head of commodity strategy at TD Securities, wrote in a note. “However, reports that major Chinese banks will suspend investors from taking new positions in gold and silver by August are blurring the outlook for this signal.”
Spot gold was little changed at $1,711.50 an ounce at 3:32 p.m. in London. Prices dipped below $1,700 last week for the first time since August. The Bloomberg Dollar Spot Index was lower again after dropping 0.4% in the previous session. Silver, palladium and platinum all advanced.
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