Precious Metals Market News (12 July 2024) | Gold Soars on Renewed Rate Cut Hopes

 

Precious Metals Market News (12 July 2024) | Gold Crosses $2,400 After CPI Data, Cools on Friday’s PPI Report

On Wednesday, the gold market calmed ahead of the Bureau of Labor Statistics’ Consumer Price Index (CPI) report. The report was released yesterday and showed better-than-expected inflation data. The CPI climbed only 3%, a more significant inflation slowdown than economists anticipated. Thursday’s report reinvigorated market confidence that one or more rate cuts may be coming in the Federal Reserve’s upcoming meetings. Gold prices soared after the report’s release, jumping over $40/oz Thursday and making headway toward its all-time high of $2,450.05/oz. 

Last week’s minutes from the Federal Reserve’s June meeting reaffirmed the FOMC’s commitment to cutting interest rates only once they have evidence that inflation is approaching their longstanding 2% target. As a core metric used to measure inflation, yesterday’s favorable CPI will play a vital role as the committee considers easing back on interest rates. 

Read the full minutes from the Federal Reserve’s June meeting here. 

Gold’s (-$.06) rate cut-fueled run was short lived. This morning, the Bureau of Labor Statistics’ Producer Price Index (PPI) came in hotter than anticipated. Purchasing prices increased by .02% in June, which is an increase from May’s numbers. Like the CPI, the PPI will be a core talking-point for the Federal Reserve as it decides whether or not to cut interest rates at its next meeting. 

Gold remains moved sideways since market open this morning, losing less than a dollar on at midday. It appears that bad PPI news was not enough to completely stop bullish price-action for the precious metal. A strong United States Dollar may also play a role in gold’s price-action moving forward. For now, investors eye the Fed’s next meeting for cues on where the precious metal is heading – and if multiple rate cuts are still a possibility. 

Are Interest Rates Going Down – And What Does This Mean For Precious Metals?

CPI data released this week demonstrates that inflation continues to slow, which could open up the possibility for more than one rate cut from the Federal Reserve before the end of 2024. Speculation surrounding rate cuts has played an active role in gold price-action this year. We expect more of the same now that the CPI shows we may be etching closer to the kind of reassurance the FOMC needs in order to justify rate cuts. 

Undercutting the CPI’s good news for rate cut hopefuls is the Producer Price Index, released this morning (12 July). The data revealed that inflation for wholesale purchases increased in June, coming in hotter than economists expected. Despite the bad news, experts remain confident that rate cuts are likely later this year. 

Federal Reserve watchdog CME Group projects a 94.4% chance that the Fed will vote to cut rates at their 17-18 September meeting. According to CME Group, the odds of another rate cut in November sit North of 50%. Multiple rate cuts should be a boon for gold bulls as they eye a fresh all-time high in the $2,450 range. 

📈 US CPI data is out, and it’s good news for crypto and stock markets!

Inflation is now at 3%, opening doors for the FED to potentially decrease interest rates in September’s FOMC meeting.

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— HashKey Global (@HashKey_Global) July 12, 2024

Silver ($30.92) moved opposite to gold this morning, dropping over $.50 and settling below the $31 level. Maintaining a consistent support at $31 has been a struggle for silver bulls this quarter, despite record supply deficits and heightened demand from China’s solar energy sector. The gold-silver ratio hovers right above 78:1, gaining 1.40:1 on the day as silver slips and gold moves sideways. 

Expect volatility in all precious metal markets as traders place their bets on if – and when – the Federal Reserve will feel confident enough to cut interest rates.