Gold: Where is it Headed Today? A Hot Day Between Inflation Data and Fed Interest Rates

Gold prices have been mixed so far in today’s trading, as investors await the US inflation report for May later today and the Federal Reserve’s interest rate decision to get a clearer picture of how quickly interest rates will be cut.

Key Data Expected

Investors will assess the state of inflation when the US Consumer Price Index figures are released at 3:30 PM Saudi time, before the Federal Reserve wraps up its two-day policy meeting. The market is divided on whether the Fed will cut rates once or twice this year after the strong US jobs report, so the focus will be on the policymakers’ updated economic projections and Chairman Jerome Powell’s press conference.

Strong US jobs data and reports that the Chinese central bank has suspended gold purchases sparked the bullion’s biggest daily drop since November 2020 last week.

Gold and Dollar Now

Gold futures are up 0.2% to $2331 an ounce. Spot gold is up about 0.1% to $2314 an ounce. On the other hand, the dollar index is down about 0.3% to 104.880 points.

Other Metals

Silver rose 0.4% in spot trading to $29.37 an ounce, platinum gained 0.7% to $957.95 and palladium rose 0.9% to $892.27.

Breaking: Collective Crash Hits Crypto Market, Bitcoin Reaches This Level

The cryptocurrency market has seen a collective plunge led by Bitcoin in the past few hours of Tuesday’s trading. Despite strong inflows into Bitcoin-linked ETFs, the largest cryptocurrency by market capitalization is not getting much support.

Bitcoin is down 3.6% in the past 24 hours to $66,857. Bitcoin had reached a near-record high of close to $74,000 in mid-March amid increased interest from new spot ETFs, but its price has since fallen. Bitcoin spot ETFs have seen strong inflows, recording net inflows every trading day last week. This is the fourth straight week of net inflows.”

However, these inflows do not seem to be enough to boost prices. Traders are buying into Bitcoin spot ETF shares while simultaneously selling related futures contracts in order to take advantage of the futures market premium, according to research by BitMEX. Thus, the selling pressure from futures trading is keeping the price in check.

On the other hand, Ethereum – the second largest cryptocurrency – fell 3.3% to $3,551 but is up 21% over the past month. The Securities and Exchange Commission recently approved key rule changes to allow for the trading of Ethereum spot ETFs. However, it could be weeks or months before issuers receive final approval to launch products.

Price Correction and Fed Decision

These major corrections come amid tension in the trading corridors of risky assets in anticipation of US inflation data and the Federal Reserve’s monetary policy decision. The inflation data and Fed expectations due out on Wednesday are likely to reinforce fears that interest rates will stay higher for longer, creating an unfavorable environment for speculation on risky assets like cryptocurrencies.

In this context, Anand Gomes, co-founder of derivatives platform Paradigm, noted that “the absence of news is a negative thing in the cryptocurrency world. The market always needs a constant stream of positive news to stay active, so in the absence of news, the natural tendency is to go down.”

Oil Rises Amid Optimistic Demand Expectations and Await Key Data Today

Oil prices have risen in today’s trading so far, supported by optimistic global demand expectations from the Energy Information Administration and OPEC, and by industry data showing that US crude oil inventories fell more than expected last week.

The Energy Information Administration raised its forecast for global oil demand growth in 2024 to 1.10 million barrels per day from a previous estimate of 900,000 barrels per day, while OPEC maintained its 2024 forecast for relatively strong global oil demand growth, citing increased travel and tourism in the second half.

Prices fell by more than 2% last week after OPEC and its allies said they would gradually phase out production cuts from October. “Crude is up with OPEC keeping its demand growth forecast.” Adding that oil demand is likely to be driven by China and other emerging economies.

Oil Inventories and Inflation Data in the US

At the same time, US crude oil inventories fell by 2.428 million barrels in the week ended June 7, according to market sources citing American Petroleum Institute figures. The decline was larger than analysts polled by Reuters had expected

Investors are also looking ahead to the US CPI data, which will be released before the market opens on Wednesday, and the US central bank’s interest rate announcement, which is scheduled for later that day.

In China, the world’s largest importer of crude oil, consumer price inflation remained stable in May, while producer price declines slowed, suggesting that Beijing will need to do more to support weak domestic demand.

Oil prices now

Brent futures rose 50 cents, or 0.6%, to $82.42 a barrel. US West Texas Intermediate crude futures rose 62 cents, or 0.8%, to $78.52

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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