Everbright Futures 0731 Gold Review: US Dollar Index Drops Sharply, Cooling Inflation Pushes Gold Higher

Overnight, spot gold in London fluctuated higher, rising 0.81% to $4,100.34 per ounce; SHFE gold night session rose 1.2%. After the release of U.S. economic data, Q2 GDP annualized growth was 1.5%, below expectations, and the PCE price index increased 3.4%, posting a negative month-on-month growth. With inflation expectations cooling, the U.S. dollar index retreated, and gold quickly entered a rebound phase. However, the repeated nature of U.S.-Iran tensions and persistent inflation risks need to be taken into account.

The U.S. PCE price index for June contracted 0.1% month-on-month, the first monthly negative growth since 2020. The year-on-year increase narrowed from 4.1% the previous month to 3.7%. Excluding energy, the core PCE’s year-on-year growth rate edged down from 3.4% to 3.3%, with only a 0.1% month-on-month increase, lower than the expected 0.2%. Inflation cooled mainly due to falling oil prices in June, but ongoing U.S.-Iran conflicts in July mean inflation expectations remain volatile. For the week ending July 25, initial jobless claims in the U.S. rose from 188,000 to 197,000, slightly below the anticipated 200,000. On the geopolitical front, U.S.-Iran clashes continued, making the outlook for negotiations bleak. Yesterday, the U.S. dollar index fell sharply, prompting a rebound in gold prices. Although the U.S. and Iran clashed again, the negative impact on gold appears to have weakened according to market feedback. Nonetheless, the market may focus on Federal Reserve policy. Given that the probability of a rate hike in September has not decreased but rather increased, one should remain cautious regarding the rebound. In the current environment of repeated geopolitical tensions and macroeconomic uncertainty, it is advisable to keep light positions for observation.

Written by: Li Qi

Professional Qualification: F3046227

Trading Consultancy Qualification: Z0016145

Editor: Zhu Henan