US Inflation Surges to 6.4%, Sending Dollar Higher and Gold Prices Lower
The US inflation rate surged to 6.4% in Q2, its fastest pace since 1981 outside of pandemic-related distortions. This unexpected increase sent shockwaves through financial markets, causing the US Dollar to rally by 0.2% on its trade-weighted DXY currency index.
US Treasury bond yields also rebounded from three-week lows as the price of Washington's debt fell. As a result, gold and silver prices suffered losses against the rising greenback. Gold dipped as low as $4,600 per troy ounce before recovering to $4,620, while silver dropped to $68 per troy ounce.
Investment teams at Swiss banking giant UBS and private bank Julius Baer remain bullish on gold and silver, citing de-dollarization and improving momentum in the markets. They believe that further pressure on the US Dollar will support a continued rise in gold prices, which have already made their steepest monthly jump since 1999.
Meanwhile, US equities remained relatively unchanged ahead of AI chip-maker Nvidia's Q2 earnings report. Crude oil fell by 8.5% from its three-month high as Qatar and Iran agreed to a new shipping route through the Strait of Hormuz without re-opening it entirely with US de-escalation.