Gold price down as traders consider impact of US inflation data

The precious metal remained above the $2,000 level supporting the bull momentum

Gold reversed gains but remained above the $2,000 level. Photo: Getty.
Gold reversed gains but remained above the $2,000 level. Photo: Getty.

Gold (GC=F) was trading down on Thursday by 0.20% to $2,033.00 (£1624.02) after US inflation data bolstered the case for ending rate hikes.

However, it was still trading above the $2,000 level, supporting the bull momentum that the precious metal may still break its August 2020 record, which was $2,069.40, according to Refinitiv data.

“Retreating from the key $2050 resistance, gold is trading comfortably above $2,000 an ounce following yesterday's release of the latest US inflation data. The Federal Reserve still has a long way to go if it is to hit the 2% target, but with global stock markets rising, the aggressive rate-hiking implemented since March last year is starting to garner results,” Doug Turner at Kinesis Money said.

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Turner also noted that the pace at which consumer prices are rising is slowing to more manageable levels, which in turn is reducing the pressure on the US central bank to continue hiking rates and providing a supportive environment for gold to thrive.

“With inflation seemingly on a downward trend and the Fed's rate hike cycle potentially drawing to a close, the short-term outlook for gold looks promising and should see the price hold at these elevated levels for a while yet,” he added.

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Turner also said it would not be surprising for gold to possibly trade sideways for some time after strong non-farm payrolls and other factors, such as China’s production levels and cautious optimism.

Also supporting the price of gold is the continued banking sector concerns with investors diversifying their portfolios and opting for the considered safe-haven asset.

PacWest (PACW) stock plunged 30% in pre-market trading on Thursday after it disclosed in an SEC filing its deposits fell 9.5% in the first week of May.

Meanwhile, Western Alliance (WAL) shares fell nearly 4% after also providing a deposit update.

In other precious metals markets, silver (SI=F) was trading down 4.08% to $24.61.

Watch: Banking, credit conditions 'may be the new risk' for markets amid Fed rate hikes: Economist

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