Midweek Precious Metals Market News (10 July 2024) | Gold, Silver Log Marginal Gains Ahead of CPI Report Release

 

Midweek Precious Metals Market News | Markets Calm Ahead of CPI Data Release

Gold (+$9.64) etched out modest gains this morning (10 July 2024), climbing just over $9.60 and settling above $2,375.96. This brings the metal closer to the $2,400 target, which gold hasn’t broached since hitting a fresh all-time high in May. Jumping above the $2,400 level would be a major win for gold bulls hoping to set yet another high point for the yellowish precious metal. 

Silver prices saw similar marginal gains, jumping just $.09 this morning and placing $31 in its sights. The precious metal spent one day above $31 last Friday before dipping, settling into a lull that has continued into midweek. Maintaining stability beyond the $31 level has been a consistent challenge for silver bulls. Over the past three months, silver has crossed the $31 threshold several times but has failed to make significant headway in establishing a soft support before dipping back below $31/oz. 

For precious metal markets, today’s conservative price-action is likely the calm before the storm. Tomorrow (11 July 2024), the Bureau of Labor Statistics (BLS) will release its Consumer Price Index (CPI) for the month of June. This report will give the metals market actionable insight into inflation rates in the United States. 

More importantly, tomorrow’s CPI data will be the subject of speculation concerning the Federal Reserve’s next meeting, which is slated for July 30-31. Minutes from the Fed’s June 11-12 meeting reaffirmed that the committee will only consider cutting interest rates once inflation appears to be comfortably moving toward 2%. Expect volatility across all precious metal markets tomorrow, with the through-line of price-action dependent primarily on the findings of the BLS. 

June’s CPI Comes Out Tomorrow – Here’s What to Expect

The Consumer Price Index (CPI) is the most widely used measure of inflation in the United States. CPI data from June will be released tomorrow (11 July) by the Bureau of Labor Statistics and should give markets insight into whether inflation is moving in the right direction. 

The data set will also play a vital role as the Federal Reserve considers whether interest rate cuts are a realistic possibility in one or more of its upcoming meetings. Last week, the Federal Open Market Committee (FOMC) released minutes from its June meeting. In these remarks, the committee reiterated that interest rate cuts are only on the table once the U.S. moves closer to the target 2% inflation rate: 

Members agreed that they did not expect that it would be appropriate to reduce the target range [525-550] until they have gained greater confidence that inflation is moving sustainably toward 2 percent […] All members affirmed their strong commitment to returning inflation to the Committee’s 2 percent objective. 

Speculation surrounding interest rates has driven much of this year’s price-action in gold and silver markets. If the BLS reveals that inflation is moving steadily closer to the Fed’s 2% target, expect heavy movement across both markets. For now, a rate cut at the Fed’s next meeting is highly unlikely, according to analysts. Experts are more hopeful about a rate cut at the FOMC’s September meeting; CME group estimates a 73.3% chance that the committee will choose to ease rates in September. 

Economists predict that May’s cooling consumer prices likely continued into June. Confirmation of this prediction could bode well for bets that interest rates may be coming sooner rather than later. In the precious metals market, expect price-action tomorrow morning to fall in-line with the degree of progress the CPI notes toward that 2% inflation target. 

Economists who produce detailed inflation forecasts expect the June CPI to have been relatively mild, following a lower-than-expected reading for May.

The median of these forecasts has the June core index up 0.22%, which would hold the 12-month rate steady at 3.4% pic.twitter.com/LGK23VnPzl

— Nick Timiraos (@NickTimiraos) July 8, 2024

Precious metals are steady today, but tomorrow will be a real test for gold and silver bulls eyeing new supports above $2,400 and $31.