Gold swung between gains and losses; central bank meetings in focus for coming week

economictimes.indiatimes.com:

COMEX gold rose during the first half of the week as recent data from the US, particularly the CPI and retail sales, showed that price pressures are cooling, warranting a smaller Fed action than previously expected. Investors are now expecting the US Fed to hike rates by 25 bps in July and pushed back against any rate hikes in the September FOMC meeting. Data released on Tuesday showed that US retail sales and industrial production missed estimates, a potentially welcome sign for the Fed as it seeks to cool inflation.

Retail sales in the US rose 0.2% m/m in June 2023, following an upwardly revised 0.5% increase in May, but below forecasts of a 0.5% rise, while industrial production went down 0.5% from a month earlier in June 2023, falling for the second month. Weak economic data improved the conviction that Fed funds might be reaching peak rates sooner than expected. However, gold prices pared early gains and edged lower during the second half of the week as the dollar gained.

The greenback gained amid weakness in the index-heavy weights Euro, Pound and Yen. The dollar index rose towards 100.8 levels, while the Euro slid after dovish comments from some ECB officials. ECB Governing Council member and known hawk Klaas Knot said monetary tightening beyond next week’s meeting is anything but guaranteed.

The pound weakened as investors pushed back against a 50 bps hike in the next Bank of England meeting after the UK inflation print showed price pressures easing significantly. The yen weakened towards $140 level as Bank of Japan Governor Kazuo Ueda reiterated his commitment to maintaining an ultra-loose monetary policy. At the same time, US weekly jobless claims fell to a two-month low of 228k during the previous week,