Gold and Silver Bullion Report | 26th June

Gold and silver prices dropped yesterday as traders are looking forward to upcoming economic data for signs of when the Federal Reserve will shift to a more relaxed monetary policy. Bullion dropped in value following comments by Fed Governor Michelle Bowman about potential upward risks to inflation during a speech in London on Tuesday. The prices of bullion have slightly increased since the data was released on Friday. Investors are eagerly awaiting new economic indicators and comments from policymakers to predict when the long-awaited interest rate cut may happen. President Mary Daly of the Federal Reserve Bank of San Francisco stated that the inconsistency in inflation data this year has led to a lack of confidence, despite more positive recent figures indicating a decrease in price growth.

Traders in the US rates options market are quickly adopting a new bet on the Federal Reserve's interest-rate trajectory: a significant reduction of 3 percentage points within the next nine months. In the last three sessions, there has been a rise in bets in the options market related to the Secured Overnight Financing Rate which will gain from a potential decrease in the central bank's main interest rate to 2.25% by early 2025. This result, which seems improbable unless the US economy rapidly declines into a recession, would entail a minimum of 300 basis points of easing from the present levels. This particular bet can serve as a way to protect another financial venture.

Yearly inflation is expected to remain relatively stable, according to sources. Furthermore, I predict that inflation will decrease more significantly next year. This is due to housing-services inflation dropping in response to previous rent decreases on new leases, while core goods inflation will continue to show a slight decrease. Inflation in core services, excluding housing, is also expected to gradually decrease over time.

Primary View: Today, gold and silver prices are stable on the global stock exchanges. Gold and silver prices are anticipated to remain range-bound or slightly lower due to recent hawkish comments from a Federal Reserve policymaker, which have dashed hopes for immediate monetary easing and caused gold prices to decline.