Gold prices experienced a slight decline on Friday, although futures still showed promise for their best week since March. This positive momentum was supported by favorable U.S. inflation data, which ultimately contributed to the depreciation of the dollar to its lowest level in over a year.
Price Action
- Gold futures for August delivery (GC00, -0.03% GCQ23, -0.03%) saw a decrease of $3, equivalent to 0.2%, settling at $1,961 per ounce on Comex.
- Silver futures for September (SI00, +0.40% SIU23, +0.40%) recorded a modest gain of 6 cents, or 0.2%, reaching $25 per ounce.
- Palladium futures for September (PAU23, -0.99%) experienced a decline of $20.80, or 1.6%, currently priced at $1,271 per ounce. Meanwhile, platinum futures for October (PLV23, -0.32%) decreased by $2.30 or 0.2%, resting at $981 per ounce.
- September copper (HGU23, -0.13%) witnessed a decrease of 1 cent, representing a 0.4% drop, settling at $3.93 per pound.
Market Drivers
As this week nears its conclusion, gold prices are positioned to finish at their highest levels since mid-June. Encouraging reports such as Wednesday’s June consumer price index inflation report and Thursday’s June producer price index report provided compelling evidence that inflation in the U.S. is currently on the decline.
Recent data showcased a marginal increase of 0.2% in consumer prices last month, marking it as the smallest escalation since August 2021. Simultaneously, wholesale prices experienced an insignificant rise of 0.1% in June, suggesting that any upward momentum has subsided.
Craig Erlam, senior market analyst at OANDA, commented on the situation, stating, “Gold has momentarily stagnated around the $1,960 mark following its surge after the release of the U.S. inflation data earlier this week. Although the yellow metal had already rebounded before the report, it surpassed expectations in terms of its impact.”
Furthermore, the inflation data had a noticeable effect on the U.S. dollar, intensifying the favorable conditions for gold. A weaker dollar renders gold more affordable for purchasers using currencies other than the dollar since it is priced in dollars. The ICE U.S. Dollar Index (DXY, +0.02%), a reliable indicator of the dollar’s performance against major rivals, exhibited a subtle 0.1% rise, resulting in an index value of 99.8.