Gold remained flat after the US inflation rate exceeded expectations and continued its decline for the second day. On the other hand, on the Shanghai Gold Exchange, ounce of gold was traded at a premium of 90 dollars and reached its historical peak.
Gold is trending horizontally after US inflation fell for the second day on Wednesday, indicating that the Fed may implement monetary tightening this year.
Spot gold is trading at $1,905 per ounce. Ounce gold and gram gold, calculated based on the interbank Dollar/TL exchange rate, find buyers at 1,650 levels.
Quarter gold is sold for 2,710 liras, and Republic gold is sold for 10,960 liras.
Core inflation, which excludes food and energy costs, which is the Fed’s favorite inflation indicator in the USA, rose above expectations in August and increased by 0.3 percent compared to the previous month.
According to the CME FedWatch tracking program following the inflation data, investors predicted a 97 percent probability that the Fed would keep interest rates constant at the September meeting, while the probability of increasing interest rates at the November meeting was 42 percent.
Swap investors now see the probability of another increase as part of the US Federal Reserve’s efforts to rein in inflation as 50 percent.
Experts state that the biggest uncertainty in the gold market is the Fed’s interest rate cut path for 2024, and this stands out as the biggest factor in the volatility of gold.
While there is an increase in bond yields following the inflation data, this situation is expected to negatively affect gold, which has a negative correlation with high interest rates and bond yields.
Spot gold traded at a premium of more than $90 per ounce on the Shanghai Gold Exchange on Wednesday compared to international markets, according to Bloomberg calculations.
This increase, which occurred as the weak yuan increased prices in recent weeks, was recorded as the highest level seen in the stock exchange established 20 years ago.