PPI data is unable to weigh on gold bulls, and analysts predict that the next week is expected to refresh historical highs

Last Friday (July 12), producer prices (PPI) were higher than expected, but failed to cool the gold market. Gold prices are on track to break above $2,400 an ounce for the second week in a row, and analysts expect gold prices to hit another all-time high in the coming week. Gold prices closed in neutral territory last week, but still 1% below their all-time highs, with spot gold closing at $2411.43 an ounce.

August gold futures closed at $2,421 on Friday, flat on the day and down just 90 cents on the weekly basis.

(One-hour chart of gold prices)

While Friday's producer price index did dent some of gold's upward momentum, the precious metal was able to hold on to key support at $2,400 an ounce, a strong sign to some analysts that the consolidation phase is coming to an end.

Relatively dovish comments from Federal Reserve Chairperson Jerome Powell, coupled with lower-than-expected consumer price index (CPI) inflation, have ushered in new bullish momentum for gold. Core CPI (excluding volatile food and energy prices) has risen 3.0% over the past 12 months. Annual inflation growth is the lowest since April 2021.

Meanwhile, in two days of testimony on Capitol Hill, Mr. Powell warned Congress that the risks to the economy were balanced. "Rising inflation is not the only risk we face," Mr. Powell said in prepared remarks.

foreign exchange trading platformCommodity analyst Carsten Fritsch also expects gold prices to reach a new all-time high next week.

"The September rate cut is now almost fully priced in and there will be another cut before the end of the year. As a result, gold prices could return to their all-time highs since May in the coming days," he said in a note on Friday.

While all eyes are now on the Federal Reserve, economists will turn next week to the European Central Bank, which is due to announce its interest rate decision on Thursday. The market expects the ECB to leave interest rates unchanged after cutting them in June.

However, the question remains whether the central bank will cut interest rates again in September.

While a dovish stance would weaken the euro-dollar exchange rate, creating potential headwinds for gold, analysts point to a larger trend in the market. Lower global interest rates are good for gold because the opportunity cost falls.

Last week, the World Gold Council pointed out that investment demand in Europe picked up in June, in line with interest rate cuts.

Robert Minter, director of ETF strategy at ABRDN, said these two factors have given gold the upside invitation it has been waiting for.

Minter added that as the labor market slows, the Federal Reserve needs to take immediate action to avoid further difficulties.

"The case for a rate cut in September is strong," he said. "If you look at how high consumer debt is, it doesn't take much pressure on the labor market to create a real problem for the economy. I don't think we're going to see a recession, but it's all up to the Fed. They're a little late, but it's not too late."

According to the Chicago Mercantile Exchange's Federal Reserve Watch Tool, the market expects a rate cut in September to be more than 90% likely.

Depu CapitalNaeem Aslam, chief investment strategist, said a September rate cut was now a foregone conclusion. Despite the release of some important economic reports next week, some market analysts do not expect the data to materially change market expectations, which should continue to support gold's new momentum.


In North America, the most noteworthy release was retail sales data for June, and economists pointed out that any further weakening in consumption would exacerbate the Federal Reserve's interest rate cut expectations.