Gold surpasses $2,400 following inflation data

Gold surged nearly 2% on Thursday, breaking above the $2,400 per ounce mark, after U.S. consumer prices unexpectedly fell last month, boosting bets on a Federal Reserve interest rate cut.

Spot gold rose 1.8% to $2,414.75 per ounce, its highest level since May 22. U.S. gold futures also climbed 1.8% to $2,421.90.

The unexpected drop in U.S. consumer prices and the smallest annual increase in a year reinforced the idea that the disinflation trend is back on track, bringing the Federal Reserve closer to cutting interest rates.

Interest rate futures reflected an approximately 85% chance of a rate cut at the Fed’s September meeting, up from around 70% before the inflation data.

Following the inflation data, the dollar fell to more than a one-month low, making gold more attractive to holders of other currencies.

Copper prices declined due to poor demand prospects, particularly in China, the largest consumer, and an oversupplied market bolstered by a new increase in inventories at London Metal Exchange (LME) warehouses.

Benchmark copper on the LME fell 1.2% to $9,788 per metric ton. Industrial metal prices have recovered since hitting a 10-week low of $9,485.50 on June 27.

ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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