World gold prices remained stable in the trading session on July 15 after US June inflation data was lower than expected, helping the market sharply reduce forecasts about the possibility of the US Federal Reserve (Fed) raising interest rates in the last meeting of the month.
As of 10:52 am Vietnam time, spot gold prices rose 0.81% to 4,031.39 USD/ounce. Meanwhile, August gold futures fell 0.78% to 4,037.80 USD/ounce.
According to data from the US Bureau of Labor Statistics (BLS), the consumer price index in June fell for the first time in six years, while core inflation remained almost unchanged compared to the previous month. This development caused the bond market to appreciate, while investors simultaneously adjusted expectations about the Fed's monetary policy.
According to the swap market, the probability of the Fed raising interest rates right in the July meeting has decreased to about 17%, much lower than the nearly 50% level before the CPI report was released.
The expectation of cooling interest rates also weakened the USD, thereby supporting the price of gold - an unprofitable asset - to maintain its recovery momentum after a period of strong correction in the second quarter.
However, the outlook for the precious metal is still facing many challenges. In a hearing before the US Congress, Fed Chairman Kevin Warsh said that the central bank is still ready to use policy tools if inflation does not return to the 2% target.
Analysts believe that although the latest CPI report helps reduce pressure on the Fed in the short term, the developments of energy prices and upcoming economic data will still determine the interest rate roadmap in the coming months.
Accordingly, gold prices may continue to receive support if inflation maintains a cooling trend. Conversely, if price pressure increases again, the expectation that the Fed will keep interest rates at a higher level for longer may continue to put pressure on the gold market.
Silver prices fell slightly by 0.48% to $58.45/ounce, after rising 1.8% in the previous session. Meanwhile, platinum and palladium prices remained almost unchanged. The Bloomberg Dollar Spot Index, the measure of the strength of the USD, fell slightly after losing 0.4% in the previous trading session.
