Market Update | 14/09/2023

Indications only | Closing prices are bids | Prices & Charts  : Trading View | Market Research Refinitiv | See disclaimer below

Today's Observations

Gold held narrowly between $1908 and $1914 in Asia and Europe on Thursday amid cautious trading ahead of the latest US Consumer Inflation data, a key economic metric closely watched by the Fed in determining its monetary policy. In the event the numbers came in largely as expected, although slightly on the firmer side, to push gold to a 3-week low of $1906 before staging a sharp reversal to a high for the day of $1916 and ended a strangely low-key session down 0.26% at $1908. The yellow metal has traded between $1908 and $1913 so far this morning with all eyes remaining focussed on the US economy with the release of producer prices data today and we expect another session of sideways trading between $1905 and $1920. Silver ranged between $23.09 and $22.78 before ending down 1% at $22.84; Platinum fell 1.1% to $902 and continues to flirt with the pivotal $900 level; Palladium rose 0.89% to $1252 to extends its’ short covering rally.

Market Commentary

September 14, 2023

• Gold prices firmed on Thursday as the dollar and Treasury yields weakened after the U.S. inflation data cemented the case for a Federal Reserve rate pause next week, although bullion was not far from a near three-week lows seen in the previous session.

• Spot gold added 0.3% to $1,912.09 per ounce by 0110 GMT, having hit its lowest level since Aug. 25 on Wednesday at $1,905.10. U.S. gold futures were up 0.1% at $1,933.70.

• The U.S. dollar index and 10-year Treasury yields eased after U.S. consumer prices increased by the most in 14 months in August as the cost of gasoline surged, but the annual rise in underlying inflation was the smallest in nearly two years, suggesting a Fed rate pause next week.

• Fed officials hoping for evidence of a clear decline in inflation and a slowing economy got some of each from data since their last meeting, but likely not enough of either to downplay the possible need for further rate increases later this year. Traders now see a 96% chance of the Fed leaving rates unchanged on Wednesday, while bets of a pause in November were at 51%, according to the CME's FedWatch Tool.

• The European Central Bank is set to decide on Thursday whether to raise its key interest rate to a record peak in what should be its final step in the fight against inflation or take a break as the economy deteriorates.

• SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.3% to 882.00 tonnes on Wednesday.

• Elsewhere, spot silver rose 0.3% to $22.89 per ounce, platinum gained 0.2% to $902.05, and palladium eased 0.2% to $1,257.26.

Economic Analysis

US consumer Consumer prices in the United States rose 0.6% month-over-month in August 2023, after a 0.2% increase in July and in line with market expectations. The index for gasoline was the largest contributor (10.6% vs 0.2% in July), accounting for over half of the increase. The energy index as a whole rose by 5.6%, accelerating from a 0.1% increase as all the major energy component indexes increased. Also contributing to the increase was continued advancement in the shelter index (0.3% vs 0.4%), which rose for the 40th consecutive month. Meanwhile, food inflation was steady (at 0.2%), as a softer increase in cost for food at home (0.2% vs 0.3%) was offset by a further advance in prices of food away (0.3% vs 0.2%. The annual inflation rate in the US accelerated for a second straight month to 3.7% in August from 3.2% in July, above market forecasts of 3.6%. Oil prices have been on the rise in the previous two months, which coupled with base effects from last year, pushed the inflation higher. source: U.S. Bureau of Labor Statistics

Gold Chart ($/oz)

Silver Chart ($/oz)

Platinum Chart ($/oz)

Palladium Chart ($/oz)

This document is issued by Value Trading BV. While all reasonable care has been taken in preparing this document; no responsibility or liability is accepted for errors of fact or for any opinion expressed herein. Opinions, projections and estimates are subject to change without notice. This document is for information purposes only and for private circulation. It does not constitute any offer, recommendation or solicitation to any person to enter into transaction or adopt any hedging, trading or investment strategy, nor does it constitute any prediction of likely future movements in rates or prices or any representation that any such future movements will not exceed those shown in any illustration.