Will Gold Prices Hit Another All-Time High In August?

Gold Stable Ahead of Inflation Data: Fed’s Rate Hesitancy and Recession Warnings Intensify

Gold prices are currently holding steady in wait-and-see mode as traders turn their attention to this week’s highly anticipated U.S Inflation figures for clues on the precious metals next big move.

Last month, the Federal Reserve announced its decision to keep interest rates on hold at a 23-year high for the eighth meeting in a row.

Two days, the July Non-Farm Payrolls report showed U.S employers substantially scaled back hiring and the unemployment rate rose for a fourth consecutive month, coming in at 4.3% – it’s highest since October 2021 – triggering the Sahm Rule, a historically accurate recession indicator.

There is no denying that the Federal Reserve under Chair Jerome Powell will never live down its misguided insistence on “transitory inflation” and its delayed decision to raise interest rates.

Fast forward two years on and mounting evidence shows that traders are once again convinced that the Fed is making another major policy error by waiting too long to start cutting rates – and thereby bringing on the very recession it’s tried so hard to avoid.

According to analysts at GSC Commodity Intelligence – “the reality is that we are now in an environment, where there can only be three possible outcomes from here; bigger and deeper interest-rate cuts from the Fed, a recession or another financial crisis”.

Each and every one of these scenarios presents an extremely bullish backdrop for Gold prices ahead.

The Big Question Now Is How High Will Gold Prices Go in August?

The answer to this question may come from the hotly awaited U.S Consumer Price and Producer Price Inflation figures, due for release this week.

In a note to clients, analysts at GSC Commodity Intelligence wrote; U.S CPI figures are expected to show consumer prices rose at an annual rate of 3% in July, unchanged from the previous month.

But core inflation, which has stayed stubbornly elevated even as the Federal Reserve has kept interest rates at 23-year highs, is expected to fall slightly to 3.2% from 3.3% in June.

Meanwhile, Producer Price Inflation figures – due a day before the CPI – will be scrutinized for categories that feed through to the Fed’s preferred measure of inflation – The Personal Consumption Expenditures Price Index.

GSC Commodity Intelligence closed the note by saying “ultimately, we’re at an inflection point where what has been bad economic news is now perceived as good news – since it may force the Fed to begin cutting rates as early as at its next policy meeting in September”.

As always, regardless of whether the data meets, beats, or misses expectations – the outcome is guaranteed to be a license to print money, which traders will not want to miss out on!