The gold price trended up this week after about two months of downward momentum.
The yellow metal kicked into gear on Wednesday (July 12), rising to just below US$1,960 per ounce after the latest consumer price index (CPI) data showed that inflation cooled down last month. CPI was up 3 percent year-on-year in June, while core CPI, which excludes food and energy, was up 4.8 percent. Both increases are the smallest seen since 2021.
The US Federal Reserve has been aggressively raising interest rates in a bid to tame inflation, and the new CPI numbers are bolstering the idea that the central bank may be coming to the end of its hiking cycle. Chair Jerome Powell has previously indicated that two more boosts are likely before the end of the year, probably of 25 basis points each.
Gold typically fares better when interest rates are low and comes under pressure when they are higher, although the relationship is not exact. After Wednesday’s initial rise, it spent some time above US$1,960 later in the week before closing around US$1,955.
The Fed’s next meeting is approaching quickly, and will run from July 25 to 26.
Could a new BRICS currency be backed by gold?
Many experts the Investing News Networks speaks to have been talking recently about the potential for a new BRICS currency, and now Russian state-controlled news agency RT has said the group plans to back this possible currency with gold.
The BRICS nations consist of Brazil, Russia, India, China and South Africa, and they’ll be holding their annual summit from August 22 to 24. Russian President Vladimir Putin said at last year’s BRICS meeting that plans for a new currency were in play, and speculation is rife about what may happen at this year’s upcoming gathering.
There isn’t much definitive information so far, and it’s worth noting that an executive at the New Development Bank, a financial institution created by the BRICS, downplayed the idea of a new currency this past week.
“The development of anything alternative is more a medium to long term ambition. There is no suggestion right now to creates a BRICS currency,” Leslie Maasdorp, vice president and CFO at the New Development Bank, told Bloomberg.
We’ll be watching closely to see what developments come out of the BRICS meeting next month.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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