Gold Gains As Powell Talks Of Good Progress On Falling Inflation

(July 9, 2024 - Daniel Hynes, Senior Commodity Strategist)

Highlights

Uncertainty over the outlook for monetary policy kept commodity markets skittish. A stronger USD weighed on investor appetite.

• Central bank speakers: Goolsbee, Bowman, Cook(Fed).
• Fed Chair Jerome Powell testifies to the House Financial Services Committee.
• OPEC to publish Monthly Oil Market Report
• EIA weekly inventory report
• BP annual energy outlook
• Economic data: Brazil CPI; China PPI, CPI; Italy industrial production; Japan PPI; New Zealand home sales, rate decision; Philippines trade; Russia CPI; South Korea jobless rate; Turkey industrial production; US wholesale inventories.
• Listen to today's 5in5 with ANZ podcast for more on the global economy and markets

Market Commentary

Gold prices edged up on increasing bets of a Fed rate cut. In comments to the US Senate Banking Committee, Chair Powell said inflation had eased notably over the past couple of years and more good data would strengthen confidence that it’s moving sustainably toward 2%. This is likely to boost investor demand after a period of rates being near to two-decade high. Central bank purchases were in focus. The Czech Republic expanded its gold reserves in June as it executes a plan to diversify investments to make it more profitable. Its holdings rose to 41.5t from 39.7t in May. Serbia also bought 5t of gold last week, bringing its total to 46.5t. This eased concerns about a broader slowdown in central bank buying after data showed the People’s Bank of China went a second month with no purchases.