Little Changed After Less Dovish Fedspeak

Gold is slightly stronger in the Asia-Pac session, after closing marginally weaker at $1912.48 on Thursday. Bullion had initially spiked to $1930 after US CPI printed in line with expectations and initial jobless claims increased. However, that move proved to be short-lived as Fedspeak dampened optimism that easing inflation signalled the end of monetary tightening.

• Fed’s Daly (’24 voter) noted that the Fed still has more work to do and that the CPI data was largely as expected and that it doesn’t say ‘victory is ours’ on inflation. Daly added the Fed is yet to determine whether to raise and how long to hold rates, with Daly being data dependent and it premature to decide on another hike. There is a lot more info coming in before the September meeting and before year-end.
• Still, the Fed is looking increasingly likely to leave interest rates unchanged at its next meeting, with market participants having significantly pared bets on a September hike over recent weeks. The market currently attaches a 10% chance of a 25bp hike at the 20 September FOMC meeting.