Gold: Fed inflation focus and volatility risk – Commerzbank
Commerzbank’s Thu Lan Nguyen notes Gold has stabilised around USD 4,400 per ounce, with markets now focused on upcoming US inflation data as the key driver for the Federal Reserve’s September decision.
Commerzbank's Thu Lan Nguyen reports that gold has stabilized around USD 4,400 per ounce, with market focus now turning to upcoming US inflation data as the primary factor influencing the Federal Reserve's September decision. Futures indicate a 60% probability of a rate hike, suggesting potential volatility in the gold market. On Friday, surprisingly strong US labor market data caused a brief dip in gold prices, but this was short-lived.
US inflation data released this week is seen as the critical determinant for the Fed's rate decision, with Fed Governor Christopher Waller echoing this recent sentiment. Consequently, market expectations for the September meeting remain uncertain, with a 60% chance of an interest rate hike priced in. This uncertainty leaves ample room for a correction in interest rate expectations if inflation data deviates significantly from expectations.
Consequently, a week of potential volatility looms for gold prices. (This article was generated with assistance from an Artificial Intelligence tool and edited by a human editor.) The FXStreet Insights Team comprises journalists who select significant market observations from reputable experts. The content features commercial insights along with additional perspectives from internal and external analysts.
AUD/USD steadies near mid-0.7100s in the Asian session on Friday, marking a halt to the previous day's sharp decline to a one-week low. The August PPI report reinforced expectations of a rate hike, bolstering the US Dollar, which weighed on the currency pair. However, hawkish expectations from the Reserve Bank of Australia (RBA) mitigated losses for the Australian Dollar.
Meanwhile, USD/JPY holds under pressure near 154.00 in the Asian session on Friday, following elevated Japanese PPI data that supported a more hawkish Bank of Japan (BoJ) stance and fueled yen appreciation. However, downside risks are contained as the US Dollar maintains recent gains ahead of the upcoming US consumer inflation data.
Gold stabilizes and trades near $4,440 per ounce troy, driven by renewed focus on the figure and the upcoming US inflation data.
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