World gold price reversed and increased sharply

The USD fell and investors waited for the US inflation report, causing each ounce of gold to increase by more than 1% yesterday.

At the close of trading on June 27, the world spot gold price increased by 30 USD to 2,328 USD per ounce. This development was opposite to the previous session, when the price decreased by 1% to a 2-week low.

The market went up as the USD depreciated and investors turned their attention to the Personal Consumption Price Index (PCE) - the Fed's preferred inflation measure - to be released today. This report is likely to affect the interest rate decision of the Federal Reserve (Fed).

World gold price developments over the past year. Graph: Reuters

"Some data released yesterday supported gold prices. Wholesale inventories were lower than forecast. First-quarter consumer data adjusted lower. Dollar Index also went down," Phillip Streible - Strategist market at Blue Line Futures commented.

US business spending on equipment fell in May, and the third-quarter revised GDP reading also showed growth slowed significantly compared to the final quarter of last year.

The dollar index fell 0.2% against a basket of major currencies yesterday. The yield on the 10-year US government bond fell to 4.28%. The falling dollar makes gold more attractive to buyers outside the US.

Investors now expect the Fed to cut interest rates twice this year, although the Fed has only forecast one, according to LSEG, a financial services firm. Lower interest rates reduce the opportunity cost of holding gold.

Other precious metals were mixed yesterday. Platinum fell 2.2% to $988 an ounce. Palladium was steady at $929 and silver rose 0.5% to $28.90.

On the US stock market, yesterday's indexes did not change much, before the first debate between two presidential candidates, Joe Biden and Donald Trump. Investors are also currently interested in signals of Japanese authorities intervening in the currency market, when the yen hit a 38-year low against the USD a few days ago.