Softer In Asia-Pac After Edging Lower On Friday

Gold is 0.2% lower in the Asia-Pac session, after edging lower on Friday as US tsys reversed cheaper following solid consumer sentiment data. The UofM’s preliminary July consumer sentiment index easily beat expectations rising to 72.6 from 64.4 in June. Additionally, 1Y inflation surprisingly increased to +3.4% (consensus +3.1%) after +3.3%; 5-10Y inflation increased a tenth to +3.1% (consensus +3.0%), back at the top end of the 2.9-3.1% range seen since Aug’21 and one-tenth off the high since 2011.

• Year-end rate hike projections firmed on heavy short-end selling, with the Fed terminal rate holding at 5.395% for Nov'23. The market continues to price around a near 95% chance of a 25bp hike at the July FOMC. Reminder, the Federal Reserve entered a policy blackout at midnight Friday, running through July 27, the day after the next rate announcement.
• Prior to Friday’s data, bullion had been supported by the positive trend in US tsys due to the growing belief in a 'soft-landing' narrative for the US economy. This narrative gained momentum as evidence of cooling inflation emerged, with producer and consumer prices falling more than anticipated in June.