Gold and Silver Bullion Highlights | 11th July

Gold prices increased on Wednesday as Jerome Powell, Chair of the US Federal Reserve, indicated to US lawmakers that he expects inflation to decrease, raising expectations for a change in interest rates in the current year. After barely increasing in the previous session, the valuable metal was traded above $2,370 per ounce. This equates to reduced interest expenses usually in favor of bullion without earning interest. In June, gold-backed exchange-traded funds experienced inflows for the second month in a row, as purchases in European and Asian markets counteracted outflows from North America, per a report from the World Gold Council.

The crucial role of central bank demand remains significant. In addition to substantial investments in India and China, Nigeria and Serbia are also increasing their holdings. The growth in demand from this industry can aid in boosting appetite. Bullion may continue to be a significant factor in driving prices to record levels, as there are periods of low demand in other sectors of the market.

Market participants are factoring in a slightly higher than 70% likelihood of a 0.25% rate decrease in September. The Federal Reserve leader highlighted that the central bank encounters more risks than just high inflation, placing increased focus on the labor market due to recent data showing a slowdown. For almost a year, the Federal Reserve has maintained the key interest rate at a level between 5.25% and 5.5%, which is the highest it has been in over twenty years, to control the rise in prices.

Key Perspective: Gold and silver prices are experiencing an increase in trading on the global markets. Gold and silver prices are expected to continue trading within a range or possibly increase for the day, following a two-day rise in gold prices. Traders are factoring in higher chances of an interest-rate cut from the Federal Reserve in September after Chair Jerome Powell stated in Congress that he thinks inflation is decreasing.