Daily digest market movers: Gold price drops sharply while the near-term outlook remains firm
- Gold price slides further to near $2,410 amid strong recovery in the US Dollar. However, the near-term appeal of Gold remains firm as investors see expectations for the Federal Reserve (Fed) to begin reducing interest rates in September as certain.
- Expectations for the Fed to initiate a move toward policy normalization in September rose as policymakers gained slight confidence that inflation has returned on its path to the central bank’s target of 2%. However, officials still want to see more soft inflation data to gain greater confidence in lowering interest rates.
- Market speculation for Fed rate cuts was boosted by the June Consumer Price Index (CPI) reading, which signaled that the disinflation process has resumed after stalling in the first half of the year. Annual headline and core CPI, which excludes volatile food and energy prices, decelerated at a faster-than-expected pace. Meanwhile, monthly headline inflation deflated for the first time in more than four years.
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