Gold futures strengthened to kick off the trading week ahead of this week’s inflation data. The yellow metal has eased since flirting with record highs again, driven primarily by abating banking turmoil fears. Can the precious metal hover with the $2,069.40 all-time again? It might depend on the April consumer price index (CPI).
June gold futures advanced $6.10, or 0.3%, to $2,030.90 per ounce at 14:32 GMT on Monday on the COMEX division of the New York Mercantile Exchange. Gold prices are coming off a weekly gain of nearly 2%, lifting their year-to-date rally of about 11%.
Silver, the sister commodity to gold, stayed below $26 to start the trading week. July silver futures tumbled $0.09, or 0.35%, to $25.84 an ounce. The white metal enjoyed a 2.3% weekly gain, bringing the year-to-date increase to nearly 7%.
All the focus over the next couple of days might be the April inflation data.
The annual inflation rate is expected to remain unchanged at 5%, while the core CPI, which eliminates the volatile food and energy sectors, is projected to dip to 5.5%. On a month-over-month basis, the CPI and core CPI are forecast to climb 0.4%.
There are concerns among financial analysts that if inflation comes in hotter than expected, it could force the Federal Reserve to reevaluate its strategy to pause its tightening cycle, which would be good news for the US dollar and bad news for the metals market.
In the meantime, recession fears are supporting gold, experts say.
“Gold remains supported as markets are still wary of further U.S. financial instability, which would only amplify U.S. recession risks. If the woes among regional banks are thrust back into the spotlight, that could trigger another leg up for this safe-haven asset,” Han Tan, chief market analyst at Exinity, told CNBC.
The US Treasury market was mixed to start the trading week, with the benchmark ten-year yield up 5.5 basis points to 3.501%. The one-month bill shed 3.9 basis points to 5.423%, while the 30-year bond added six basis points to 3.822%.
Gold is typically sensitive to movements in interest rates because they can impact the opportunity cost of holding non-yielding bullion.
The US Dollar Index (DXY), a measurement of the greenback against a basket of currencies, was flat at 101.20. The DXY fell 0.9% last week and is down about 2.2% on the year.
The strength of the greenback can weigh on dollar-denominated commodities, making it more expensive for foreign investors to purchase.
In other metal markets, June copper futures picked up $0.0365, or 0.94%, to $3.9195 per pound. June platinum futures surged $25.60, or 2.4%, to $1,093.90 an ounce. June palladium futures soared $78.70, or 5.29%, to $1,565.50 per ounce.