AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

7/11/2019: Gold slides on CPI uptick

Source: Bill Musgrave, American Gold Exchange

Austin — Gold slid 0.4% to close under $1,407 after an uptick in core consumer inflation tempered expectations for an aggressive rate cut from the Federal Reserve. The metal had traded as high as $1,429 earlier in the session before receding on profit-taking.

Consumer inflation rose in June, with the CPI picking up 0.1%. Prices rose for consumer staples, rent, autos, and health care, among others, while falling for gas, electricity, and natural gas. The so-called core rate, stripping out food and energy, rose more aggressively at 0.3%, while the 12-month rate edged up to 2.1%.

While mild, the inflation reading was stronger than forecast, causing traders to rethink expectations for the July Fed meeting. Following yesterday's dovish statements from Fed Chair Jerome Powell, Fed-funds futures trading showed the odds of a half-point reduction in interest rates jumped from 3% to 30%, pressuring the dollar and helping gold rise to a one-week high.

Today, the likelihood of that hefty cut pulled back to 16%, according to CME FedWatch, prompting traders to take profit from gold's Fed-inspired rally. The odds of at least a quarter-point cut remain at 100%. Lower rates support gold by pressuring the dollar, making the metal less expensive in other currencies.

The other precious metals were mostly lower, with silver and palladium dropping 0.5% and 1.8%, respectively, while platinum added 0.1%.

At the Comex close: August gold slid $5.80 to $1,406.70; September silver dropped 8 cents to $15.15; October platinum added 90 cents, to $830.90; and September palladium fell $29 to $1,559.10 an ounce.