Gold exhibited minimal changes on Monday as investors eagerly anticipated the release of U.S. inflation data, which holds the potential to influence the Federal Reserve’s policy stance. Concurrently, palladium prices experienced a decline below the $1,200-per-ounce threshold for the first time since December 2018.

Around 10:10 a.m. EDT (1410 GMT), spot gold remained stable at $1,923.59 per ounce. U.S. gold futures saw a minor decrease of 0.2%, reaching $1,928.60.

According to Jim Wyckoff, a senior analyst at Kitco, “Gold has a strong chart support at $1,900. However, sustained high inflation might push gold below this level, causing prices to quickly drop to $1,848.”

The forthcoming week will place a particular focus on the release of U.S. CPI (Consumer Price Index) data, scheduled for Wednesday. The recent release of the Fed’s minutes revealed that a majority of policymakers anticipated further tightening of monetary policy.

The allure of gold is often diminished by higher interest rates due to its lack of interest payments.

Since attaining near-record levels in early May, bullion prices have declined by over 7%, primarily due to investors reducing their expectations of the Fed’s rate-hiking cycle coming to an end. Wyckoff stated, “The technical outlook for the gold market remains bearish. It would likely require a geopolitical catalyst to significantly boost prices.”

On Friday, the Labor Department’s employment report indicated that the U.S. economy witnessed its lowest job growth in two and a half years in June. However, the consistent growth in wages suggests ongoing tightness in labor market conditions.

In the meantime, palladium experienced a 2.9% drop, reaching $1,208.78 per ounce after hitting a session low of $1,190.65. The decline can be attributed to the increasing threat posed by the rapid rise of electric vehicles, which has the potential to severely impact demand for the autocatalyst metal amid a broader economic weakness.

Heraeus analysts mentioned in a note that, “If futures markets’ predictions hold true and interest rates continue to rise, they will likely reach a pain point for U.S. consumers, slowing down sales and dragging on palladium demand over the next 12 months.”


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