Last week’s market trend saw gold prices drop 0.46% to $2015.6 per ounce for American gold, and the Shanghai gold 2308 contract drop 1.40% to ¥451.50 per gram.
Two important data were released last week. First, the US April CPI fell slightly from the previous month, with a year-on-year increase of 4.9% and a core CPI increase of 5.5%. Second, the year-on-year growth rate of US April PPI was 2.3%, lower than the expected 2.5% and the previous value of 2.7%. The unexpected drop in both sets of data indicates a decline in US inflation and supports the expectation that the US Federal Reserve will pause its interest rate hikes in June and may even lower interest rates in July.
Although US inflation remains high, the Federal Reserve’s monetary tightening measures have not ended, and officials’ speeches still tend to be hawkish. The 5% interest rate may be maintained for a long time, and the market’s response to a high interest rate environment is uncertain. Therefore, the current consensus is to be cautious about a bullish view of gold prices, especially given the crowded bullish positions overseas. Additionally, the drop in gold and silver prices has not led to a decrease in ETF holdings, indicating that many investors see this as a buying opportunity. Therefore, there is no need to be overly pessimistic about future prices, and they may simply undergo high-level volatility and consolidation.
