(RTTNews) – After ending the previous session roughly flat, gold prices have moved sharply lower on Wednesday as traders resorted to taking profits from the recent gains. Holding back big moves, investors analyzed the inflation numbers released today while awaiting the upcoming Jackson Hole Symposium.
Front Month Comex Gold for September month delivery has declined sharply by $43.40 (or 0.94%) to $4,597.50 per troy ounce.
Front Month Comex Silver for September month delivery has also tumbled by $0.612 (or 0.89%) to $68.070 per troy ounce.
On the economic front, data from the U.S. Bureau of Economic Analysis showed that the Personal Consumption Expenditure price index increased 3.70% year-on-year in July, the same as in June, above expectations of 3.60%.
On a month-on-month basis, the PCE Index increased 0.20% in July, above market expectations of a 0.10% uptick, following a 0.10% decline in June.
Both the monthly and annual PCE numbers came in slightly above the expectations of economists.
On a year-on-year basis, the core PCE index (which excludes food and energy) rose by 3.30% in July, well above the Federal Reserve’s 2.00% target.
On a month-on-month basis, the core PCE rose 0.20% from the previous month in July, as expected.
Both the monthly and annual core PCE numbers, matched analysts’ forecasts, suggesting a steady inflation rate.
In combination, the data indicated that inflation continues to remain elevated, floating above the target of the U.S. Federal Reserve.
A reading that aligns with expectations is usually deciphered to hint that there are no immediate pressures to prompt a shift in the Fed’s monetary policy outlook.
Investors are now focusing on the upcoming Jackson Hole Symposium at the Jackson Lake Lodge, located within Grand Teton National Park in Wyoming, set to begin tomorrow. The Fed often uses the annual event to hint at its long-term plans.
The Federal Reserve Chair Kevin Warsh delivers his keynote address on Friday, his first one after assuming chair.
Warsh abandoned the practice of offering forward guidance. Hence, Warsh’s speech is highly anticipated by economists to comprehend the Fed’s assessment of the U.S. and global economy against the backdrop of multiple issues impacting the U.S. economy and derive clues on its monetary path ahead.
These include the ongoing U.S.-Iran war, crude oil supply disruptions, oil-linked inflationary pressure, recent moves by the U.S. Treasury Department to accelerate the buyback of long-term bonds, and last Wednesday’s announcement that the U.S. national debt has crossed $40 trillion.
Recently, a large-scale sell-off in U.S. government bonds sent the 30-year yield to levels not seen in around two decades.
To halt the upside flow, the U.S. Treasury announced plans to double the buyback sizes for 10-year to 30-year securities to at least $4 billion per operation.
The delay in resumption of shipping traffic across the Strait of Hormuz supported oil prices on the upside.
The U.S. dollar index was last seen trading at 99.16, up by 0.25 points (or 0.25%) today.
Currently, investors are betting on a 40.10% chance of a 25-basis-point interest rate-hike at the upcoming meeting of the U.S. Federal Reserve on September 15-16, while the odds on rates being held at the current level stand at 59.90%, according to the CME Group’s FedWatch Tool.
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