Gold Steadies Ahead of U.S. Inflation Data as Recession Concerns Persist

Gold prices held steady on Monday as traders awaited crucial U.S. economic data that could influence the Federal Reserve’s monetary policy. The precious metal was trading around $2,430 an ounce in Asia, following a 0.5% decline last week. Investors are closely watching the consumer price index (CPI) report, scheduled for release on Wednesday, which is expected to show a 0.2% increase from June.
A modest rise in CPI is unlikely to shift expectations significantly, with many anticipating a Federal Reserve pivot towards monetary easing as early as next month. The central bank is weighing the need to balance inflation risks with avoiding a potential recession.
Fed Governor Michelle Bowman highlighted ongoing inflationary pressures and strength in the labor market in her recent remarks. Higher borrowing costs generally put downward pressure on gold prices, as the metal yields no interest.
Hedge funds have reduced their bullish positions on gold futures to a five-week low, according to the latest data from the Commodity Futures Trading Commission for the week ending August 6.
Despite the recent dip, gold has risen approximately 18% this year and remains close to last month’s record highs. The metal has been buoyed by expectations of rate cuts, strong central bank purchases, robust demand from Chinese consumers, and heightened haven buying due to geopolitical tensions in the Middle East and Ukraine.
As of 9:11 a.m. in Singapore, spot gold was little changed at $2,429.41. The Bloomberg Dollar Spot Index remained flat. Silver prices declined, while palladium and platinum held steady.