Gold traded around $2,500 per ounce on Monday, hovering at an all-time high, driven by strong demand for safe-haven assets while markets evaluated the Federal Reserve's policy outlook. Reports indicated that US Secretary of State Antony Blinken is in the Middle East to broker ceasefire negotiations with Gaza. However, ongoing strikes from Israel and conflicting statements from Hamas and Israel have dampened the chances of a breakthrough. Additionally, concerns about escalation between Ukraine and Russia were noted as Ukrainian forces advanced into Russian territory. Meanwhile, positive US economic data last week led markets to favor a 25bps rate cut by the Fed in September, rather than a 50bps cut. Still, with inflation approaching the Fed's target, markets continued to expect a total of 100bps cuts over the remaining three meetings this year. Investors now await Fed Chair Powell’s speech and the latest FOMC minutes later this week for further insights on monetary policy.
Silver rose to above$28 per ounce, hitting a near two-week high as further evidence that US inflation is cooling reinforced expectations for Federal Reserve interest rate cuts. Data released this week showed that both producer and consumer prices in the US rose less than expected in July, with the annual headline CPI posting the lowest reading since March 2021. Markets are fully priced in for a Fed rate cut in September, but remain divided on whether it will be a 25 or 50 basis point reduction. A total of 100 bps of easing is also seen this year. Elsewhere, Australian miner Perth Mint reported that its silver product sales surged 91% month-on-month to 939,473 ounces in July, the highest level since February. US-bound shipments accounted for most of its silver sales which remains the firm’s biggest market.
