Gold futures climbed to $4,470.40 after opening at $4,430. The July CPI report due 8:30 a.m. ET will test the metal's momentum after a soft jobs report.
Gold futures held above $4,400 on Wednesday, with the December contract climbing to $4,470.40 by 7:35 a.m. ET after opening at $4,430. The move came as traders awaited the July consumer price index, the next major test for the metal after a softer-than-expected jobs report.
Economists project the CPI rose at a 3.4% annual rate in July, down from June's 3.5% increase, and 0.1% month over month. A hotter print would strengthen the case for a Federal Reserve rate hike in September, a scenario that typically pressures gold by lifting the dollar and real yields. A cooler number would support the case for a pause. Traders assigned a roughly 50% probability to a September rate increase, according to pricing in the federal funds futures market.
Gold has rallied 95.6% over the past year through Jan. 29, driven by geopolitical uncertainty, central bank purchases, and expectations of looser monetary policy. The metal's ability to hold above $4,400 suggests the market is pricing in a benign CPI outcome, but a surprise could trigger a sharp move.
For investors tracking the gold ETFs, the SPDR Gold Trust (GLD) carries an AlphaScore of 28 out of 100, labeled Weak, while the iShares Gold Trust (IAU) scores 32, also Weak. The scores reflect the funds' relative momentum and risk-adjusted returns compared with peers.
A weaker-than-expected CPI would reduce the likelihood of a rate hike and could push gold above $4,500. A stronger print would put the $4,400 support zone in play. The CPI report is due at 8:30 a.m. ET.
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