On Thursday (August 15th) morning trading in the Asian market, spot gold fluctuated narrowly and is currently trading around $2448.40 per ounce. On Wednesday, gold prices fell 1% to below the 2450 mark, hitting a low of $2437.96 per ounce and closing at $2447.81 per ounce. Previous data showed that consumer prices in the United States rebounded as expected in July, which poured cold water on the expectation of a significant interest rate cut by the Federal Reserve next month. In addition, some bulls took advantage of the opportunity to take profits, which also dragged down gold prices.

Tai Wong, an independent metal trader in New York, said, "The September rate cut is a certainty; current data shows that the Federal Reserve will start from 25 basis points, which will disappoint the market that likes to cut interest rates beyond expectations

The Bureau of Labor Statistics of the US Department of Labor reported that the Consumer Price Index (CPI) rebounded by 0.2% in July, following a 0.1% month on month decline in June. The increase is in line with economists' expectations. In the 12 months ending in July, CPI increased by 2.9%, compared to a 3% increase in June.

Analysts pointed out that the US CPI rose moderately in July, with year-on-year growth slowing down to below 3% for the first time since early 2021, increasing expectations of a rate cut next month, although it may not be as aggressive as the market hopes.

The core CPI in the United States increased by 0.2% month on month in July, compared to a 0.1% increase in June. Core inflation is driven by a 0.5% increase in rent, with a 0.3% increase in rent in June. The core CPI increased by 3.2% year-on-year, the smallest increase since April 2021, and the year-on-year increase in June was 3.3%.

This report, along with the report of a moderate increase in producer prices in July, indicates that inflation is on a downward trend. Amid growing concerns in the market about a sharp economic slowdown, this will provide the Federal Reserve with more space to focus on the labor market.

This moderately reduces the expected target of a 50 basis point rate cut in September, "said Amo Sahota, the head of Klarity FX in San Francisco

Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said, "The market believes that the stickiness of inflation is greater than the Fed's expectations, and they are withdrawing some bets on a 50 basis point rate cut. In addition, I believe this has indeed laid the foundation for the Fed's action in September. Of course, the biggest question for the market is whether it will be 25 basis points or 50 basis points, and I suspect this will be decided in the coming weeks

This report shows that the Federal Reserve continues to make progress in achieving its inflation target, "said Scott Anderson, Chief Economist at BMO Capital Markets in Melbourne." There is nothing in the report that will prevent the Fed from cutting interest rates in September, but the market's hopes for a larger rate cut still seem unlikely to come true. "

According to the Chicago Mercantile Exchange's FedWatch Tool, the market currently believes that there is a 36% chance that the Federal Reserve will cut interest rates by 50 basis points in September, compared to 50% before the release of US CPI data.

Traders still believe that by the end of the year, the Federal Reserve will loosen the current federal funds rate of 5.25% to 5.5% by a full percentage point. The policy interest rate has remained unchanged since July 2023, after the Federal Reserve began raising interest rates in March 2022.

Lou Brien, a market strategist at DRW Trading in Chicago, said that historical analysis based on last Friday's unexpected rise in the unemployment rate to 4.3% suggests that the unemployment rate may reach 5% before the November employment report is released on December 6th.

He believes that from a risk management perspective, if the federal funds rate is to fall by 100 basis points at the remaining three meetings in 2024, the Federal Reserve should cut interest rates by 50 basis points in September.

The CPI data is quite mild, and I don't think that's preventing the Federal Reserve from taking action in September, "he said." I still advocate that the Fed should be more aggressive at this stage because the unemployment rate has reached this point

Phillip Streible, Chief Market Strategist at Blue Line Futures, said, "Expectations have now returned to support a rate cut of only 25 basis points, so this may take away some momentum from the gold market

Atlanta Fed President Bostic said on Tuesday that he hopes to see "more data" before preparing to support a rate cut.

The US dollar index bottomed out and rebounded on Wednesday. After the release of CPI data, it fell to 102.27, a new high since August 5th, but recovered most of the decline in the late trading, closing around 102.60; The yield of US Treasury bonds continued to decline, with the 10-year bond yield hitting a low of 3.811% and closing at 3.826%, marking four consecutive trading days of decline. However, in the morning session of the Asian market on Thursday, the yield of US Treasury bonds fluctuated and rebounded, and has now recovered most of Wednesday's decline. The yield of 10-year US Treasury bonds is currently trading around 3.845%.

This trading day will see the July retail sales monthly rate in the United States, commonly known as the "terrifying data", which investors need to pay close attention to. The market expects a month on month growth of 0.3%, which is slightly biased towards suppressing gold prices. In addition, investors should also pay attention to the performance of the changes in the number of US initial jobless claims, the annual rate of the US import price index in July, the US Federal Reserve manufacturing index in August, and the US monthly rate of industrial output in July.

In addition, investors also need to pay attention to news related to the geopolitical situation. The ceasefire negotiations between Israel and Hamas will begin in Doha on Thursday and last for several days. Officials from Israel, Qatar, the United States, and Egypt will participate in the Gaza ceasefire negotiations; Hamas will be absent from the Gaza ceasefire negotiations in Doha on the 15th, but may hold talks with relevant mediators later and evaluate Israel's response in the negotiations.

Iran has previously stated that a ceasefire agreement is necessary in order to abandon retaliatory actions.

In the Russia-Ukraine conflict, the Ukrainian army further advanced to the Kursk region of Russia. Kiev said that the result of this practice would provide a strategic buffer zone to protect its border areas from Russian attacks. Russian President Putin vows to expel Ukrainian troops. The Russian Ministry of Defense stated that the Russian military has repelled a series of Ukrainian attacks in Kursk. Some blogs supporting the Russian war claim that the front line has stabilized, while state television reports that the Russian military is reversing the situation

From a technical perspective, the gold price has repeatedly been blocked from reaching the 2480 level, and its upward momentum has significantly weakened. Investors need to beware of the possibility of the gold price fluctuating at a high level and building a peak. In the short term, they should pay attention to the support near the 2420 level, and the support of the 21 day moving average is also near this position. If the gold price falls below this level, it will be a further bearish signal in the future.

Daily chart of spot gold