Spot gold experienced a volatile and weakening session overnight, declining by 2.08% and breaking below the $4,000 per ounce threshold. SHFE gold followed suit, dropping 1.34%. The market had previously seen a short-term rebound in gold prices, fueled by bets on a rapid Federal Reserve pivot to easing following significant cooling in June's CPI and PPI data. However, a series of hawkish Fed communications and the emergence of energy-related inflation risks prompted a swift market correction, leading to the current phase of weak and choppy trading in gold.
U.S. retail sales for June showed a month-on-month increase of 0.2%, aligning with market forecasts, while the May figure was revised upward to a 1% gain. This consumer resilience has alleviated some concerns about an economic downturn. For the week ending July 11th, initial jobless claims in the U.S. fell to 208,000, below the anticipated 217,000. Additionally, the Philadelphia Fed Manufacturing Index for July surged to 41.4, significantly exceeding the forecast of 12.5 and the previous reading of 10.3, with the new orders component rising to 37 from 27.3 the prior month. Geopolitically, reports indicate that while Iran continues talks with the U.S., American forces have conducted a new round of airstrikes, marking the fifth consecutive night of attacks against Iranian targets. The resilience of the U.S. economy and labor market, coupled with persistent inflation pressures amid geopolitical tensions, is reinforcing the Federal Reserve's hawkish stance. Expectations for interest rate hikes are proving difficult to subdue, propelling the U.S. dollar index higher and making it challenging for gold to sustain its recent rebound, leading to renewed weakness. The market has previously shown significant divergence in views on gold's price direction. Under the influence of geopolitical disturbances, fluctuating inflation, and a hawkish tilt from policymakers, gold's trajectory is currently characterized by weakness and corrective moves. Whether gold can solidify its position within the current bottoming consolidation range as a potential low for the year remains to be seen.
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