Gold Gains Modestly Amid Ongoing Trade Uncertainty

(RTTNews) - Gold prices increased modestly on Wednesday as trade uncertainty prevails in the backdrop of inflation data from US.

Front Month Comex Gold for July delivery climbed $22.70 (or 0.68%) to $3,352.50 per troy ounce today.

Front Month Comex Silver for July delivery inched up 1.90 cents (or 0.05%) to $37.853 per troy ounce today.

On the data front, the Labor Department said its producer price index for final demand was unchanged in June after rising by an upwardly revised 0.3% in May.

Economists had expected producer prices to increase by 0.2% compared to the 0.1% uptick originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 2.3% in June from an upwardly revised 2.7% in May.

The annual rate of producer price growth was expected to edge down to 2.5% from the 2.6% originally reported for the previous month.

Industrial Production in the US rose by 0.3% in June, exceeding market expectations.

US Manufacturing Output crept up 0.1% in June, only slightly beating expectations.

US capacity utilization edged up to 77.6% in June from a revised 77.5% in May.

Yesterday's CPI data showed an increase of 2.7% from a year earlier.

While these data showed tariffs could have already started impacting the economy, economists are apprehensive of a stagflationary shock in which inflation rises but the economy flatlines or shrinks.

The US Fed's next monetary policy decision will be on July 30.

Recent economic data and President Donald Trump Trump's latest aggressive trade measures have dimmed the hopes of an interest rate cut. Trump has expressed his displeasure with the Fed for not cutting rates.

In the Middle East, Israel bombed the entrance to the Syrian defense ministry HQ.

Separately, the US and the West are still silent on the two Red Sea attacks conducted by Yemen's Houthi rebels last week, sinking two bulk carriers. Any retaliation by the US and the West could escalate the tensions more and increase gold prices.

After pushing the "reciprocal tariff" suspension period deadline from July 9 to August 1, Trump announced a spate of tariffs on various trade partners. Countries are frantically pacing to negotiate and strike a deal with their US counterparts.

The World Gold Council's mid-year outlook released yesterday projects that gold could rise further up to 5% under current consensus expectations. It added that if stagflation intensifies or recession begins, price may go up another 10% to 15%.

China's official gold holdings have risen for eight consecutive months. The council states that central banks are increasingly bolstering their gold reserves.