World gold prices continued to fluctuate around the 4,000 USD/ounce mark in the trading session on July 16 when the market assessed new US inflation data and the monetary policy outlook of the US Federal Reserve (Fed).
As of 10:08 am Vietnam time, spot gold price decreased by 0.78% to 4,031.44 USD/ounce, August gold futures contracts decreased slightly by 0.38% to 4,036.25 USD/ounce. Meanwhile, silver price decreased by 1.39% to 56.96 USD/ounce, platinum price decreased by 0.73% to 1,665.87.
Market developments took place after the US announced that the producer price index (PPI) for June was lower than expected. According to the US Bureau of Labor Statistics (BLS), the PPI decreased by 0.3% compared to the previous month and increased by 5.5% compared to the same period last year. Core PPI increased by 0.2% in the month and increased by 4.7% in the year.
Previously, the consumer price index (CPI) in June also recorded a decrease of 0.4% per month – for the first time since 2020 – bringing inflation for 12 months down to 3.5%, lower than the 4.2% of May.
After the inflation data was released, the Bloomberg Dollar Spot Index and US government bond yields simultaneously fell in the previous session. However, the market continued to monitor the developments of energy prices as oil prices rose for the fourth consecutive session.
In a hearing before the US Congress, Fed Chairman Kevin Warsh reaffirmed the goal of bringing inflation to 2%, and said that the Fed will continue to assess economic data before deciding on the next steps on interest rates. He also rejected the view that the wave of investment in artificial intelligence (AI) is the cause of increasing inflationary pressure.
According to the CME FedWatch tool, the market currently values about 49% of the Fed's ability to raise interest rates at the September meeting.
Since the beginning of the year, gold prices are still about 27% lower than the historic peak of 5,589.38 USD/ounce set at the end of January, after recording the second quarter's sharpest decline since 2013.
However, some financial institutions still maintain positive prospects for gold in the long term. In which, J.P. Morgan continues to forecast that gold prices could reach 6,000 USD/ounce by the end of the year, with momentum coming from gold buying activities by central banks, especially China, India, Turkey and Poland.
