Gold declines as investors await the US inflation report and the Federal Reserve meeting
European stocks tumbled on Wednesday as investors awaited an important report on inflation in the United States scheduled to be issued later today, searching for indications about the path of US interest rates.
The European Stoxx 600 index fell 0.5 percent, with the sector of technology companies sensitive to interest rates falling 0.8 percent.
The consumer price index in the United States is likely to rise at the largest pace in 14 months last August, but the expected moderate rise in inflation could encourage the Federal Reserve (the US central bank) to keep interest rates unchanged at its meeting next week.
Meanwhile, a source said that the European Central Bank expects inflation in the euro zone to remain above three percent next year, which increases concerns about raising interest rates for the 10th time in a row tomorrow, Thursday.
BP's shares, listed in London, fell by 1.6 percent, in addition to the decline of the Financial Times 100 Index by 0.2 percent, also affected by data that showed a decline in British economic output more than expected last July.
Japan's Nikkei closed lower
In East Asia, the Japanese Nikkei index closed lower in limited trading before the release of inflation data in the United States, but losses were limited as investors bought stocks that could bear the brunt of rising interest rates.
The Nikkei fell 0.21 to close at 32,706.52 points after rising by 0.3 percent earlier in the session. The broader Topix index also fell 0.5 percent to 2,378.64 points.
Hideyuki Suzuki, General Manager of Investment Research at SBI Securities, said, “The market had little direction today, partly due to investors’ anticipation of US inflation data,” adding, “But in light of this environment, investors wanted to buy stocks with value.” “Which limited losses.”
It is noteworthy that the Federal Reserve will meet to discuss the path of interest rates on September 20th.
In addition, SoftBank Group shares fell 1.63 percent to be the biggest losers on the Nikkei index, followed by employment agency Recruit Holdings, which lost 1.67 percent, while KDDI Telephone Company shares rose 1.58 percent to provide the greatest support. For the Japanese index, Mitsubishi UFJ Financial Group shares jumped 3.13 percent, providing the greatest support to the Topix index.
Gold is falling
In the precious metals markets, gold prices declined, but held above the lowest level in two weeks reached in the last session, as markets awaited US inflation data that may provide indications on the path of interest rates.
Gold prices in spot transactions fell 0.1 percent to $1,910.87 per ounce, after touching their lowest levels since August 25 at $1,906.50 per ounce yesterday, Tuesday. US gold futures fell 0.1 percent to $1,993.30 per ounce.
Interest rate position
Although expectations indicate that the US Central Bank will keep interest rates unchanged during the monetary policy meeting on the 19th and 20th of this September, it will likely wait until the period between April and June 2024 or later before reducing interest rates. According to economic analysts polled by Reuters.
Gold is very sensitive to interest increases because this increases the opportunity cost of owning the precious metal that does not generate a return.
As for other precious metals, silver fell in spot transactions 0.8 percent to $22.92 per ounce, platinum fell 0.5 percent to $905.49 per ounce, and palladium fell 0.8 percent to $1,230.44 per ounce.
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