Gold prices shrink despite turmoil in US bank stocks

Gold prices finished lower today, Aug. 9, as markets awaited the release of July’s consumer price data in the US tomorrow, despite the turbulence of US bank stocks for the second straight day.

Bullion for August delivery decreased by 0.45%, or $8.70, to close at $1,915.40 an ounce, after investors turned away from heavy trading, looking ahead to inflation data.

Expectations suggest a slight uptick in the US Consumer Price Index (CPI) July reading to an annual rate of 3.3%. Meanwhile, markets are pricing in an almost 13.50% chance that the Federal Reserve decide on a 25-basis-point interest rate hike at the forthcoming September meeting, according to the CME FedWatch Tool.

Elsewhere, the Mortgage Bankers Association's seasonally adjusted index data showed today that the total application volume declined by 3.10% on a weekly basis, with the rate on the government’s low down payment option increasing to a 21-year high.

US mortgage rates could see a much bigger move tomorrow after the release of the monthly inflation data, according to a separate survey from Mortgage News Daily, which indicated that markets began to absorb the full effects of tightened monetary policy in the past period.

Markets are anticipating tomorrow’s release of the US Consumer Price Index (CPI) July reading, with expectations suggesting a slight uptick to an annual rate of 3.3%, while core inflation would remain stable at 4.8%.

The 15 largest American banks lost a mammoth $46.5 billion in market value on Aug. 9, after Moody’s downgraded its ratings of 10 regional banks, with losses of US banks from non-performing loans amounting to about $19 billion during the second quarter, hitting a three-year peak.