Gold hit by profit taking despite friendly U.S. inflation data

NEW YORK (August 14) Gold prices are sharply down in midday U.S. trading Wednesday, following another cool U.S. price inflation report. Profit-taking is featured from the shorter-term futures traders, on a “buy the rumor, sell the fact” scenario after this week’s tame U.S. inflation numbers were already expected beforehand by traders. December gold was last down $29.10 at $2,478.70. September silver was down $0.446 at $27.335.

The U.S. data point of the day Wednesday saw the consumer price index for July come in at up 0.2% from June and up 2.9%, year-on-year. The core rate was up 0.2% from June and up 3.2%, year-on-year. Those numbers were in line to slightly lower than market expectations. Tuesday’s July producer price index came in at up 0.1%. Excluding food and energy, the “core” PPI was unchanged from June versus. This week’s tame inflation numbers fell into the camp of the U.S. monetary policy doves, who want to see the Federal Reserve cut U.S. interest rates sooner rather than later. The marketplace is presently pricing in a 0.5% rate cut from the Fed at its September FOMC meeting.

The retail sales report on Thursday will also be closely scrutinized by the marketplace.

The gold market this week had seen some modest safe-have demand that pushed the yellow metal to near its record highs. The marketplace is expecting tensions in the Middle East to rise, as Iran and/or its proxies are expected to retaliate militarily against Israel after Israel assassinated Hezbollah and Hamas officials a couple weeks ago.

The key outside markets today see the U.S. dollar index slightly down. Nymex crude oil prices are lower and are trading around $77.50 a barrel. The benchmark 10-year U.S. Treasury note is presently fetching around 3.8%.

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