Gold prices in New York experienced an increase on Friday, overcoming initial profit-taking as the market reacted to July’s softer inflation data, which seemed to diminish the likelihood of a Federal Reserve interest rate hike in September.
The December contract for gold, which is the most actively traded, climbed 0.3%, reaching $4,435.00 per ounce after dipping earlier to $4,365.50 and hitting a high of $4,454.60 during the day. After a jump that saw prices exceed $4,500 earlier in the week, sellers began to enter the market as gold reached a 10-week peak on Thursday.
In the spot market, gold prices fell to $4,332 an ounce by early afternoon in London, but later bounced back slightly to settle at $4,353.27, reflecting minimal changes throughout the week.
September silver, which is also the most actively traded contract, saw a 0.2% increase to $65.13 per ounce, while spot silver rose by 0.4% to $64.75, reducing its decline for the year to about 8%.
Consumer prices were stable in July, indicating a reduction in the impact of the energy crisis stemming from the Iran war, while producer prices remained unchanged. Currently, money markets estimate about a one-in-three chance for a rate hike in September, a drop from over 40% just a week prior. Traders are now focusing on upcoming employment data and forthcoming remarks from Federal Reserve Chairman Kevin Warsh at the Jackson Hole symposium later this month.
According to Han Tan, the chief market analyst at Bybit, “Gold barely maintained its weekly gains as the market engages in profit-taking after prices hit a two-month high mid-week.”
Ilya Spivak, head of global macro at TastyLive, expressed that perhaps some speculative capital is finding temporary gains in gold, but there isn’t a strong short-term catalyst on the horizon.
BMI, a division of Fitch Solutions, noted in its weekly Commodity Strategy Note that precious metals have risen over 10% so far this month. The organization predicts the Federal Reserve will maintain its current rate levels through the end of 2026, and with the dollar index stabilizing between $98 and $102, “much of the previous correction is behind us.” They forecast an annual average gold price of $4,400 per ounce.
Caracas Makes a Request
The Venezuelan government, along with rebel groups, has approached the Bank of England requesting the release of 31 tonnes of gold, valued at over $4 billion at current prices, intended for reconstruction efforts following the June earthquake that resulted in over 6,000 fatalities, according to a report from the Financial Times.
This gold has been held in bank vaults since 2018 after Britain ceased recognizing the Caracas government, leading to a protracted High Court dispute over ownership of the bullion. The World Bank has declined to comment and is expected to seek legal clarity regarding control of the reserves. There is also a concern about ensuring that any proceeds benefit Venezuelan citizens rather than enriching political figures, considering that the funds are state-owned.
In recent trading, precious metal stocks have outperformed their counterparts. Over the last ten trading sessions in New York, gold surged 8% and silver gained 12%, while companies like Hecla Mining, Eldorado Gold, Equinox Gold, Cool Mining, Agnico Eagle, and Newmont saw increases between 26% to 32%.
