According to the Federal Reserve’s latest Beige Book report, economic activity in 11 of the 12 Federal Reserve districts increased slightly to moderately during the period from late May to June, while one district remained unchanged. This growth rate is very close to the previous period, when economic activity expanded in 10 districts, remained flat in one, and declined in one. Consumer spending rose slightly as rising prices, particularly fuel prices, dampened sales in other categories. Some districts reported that consumers reduced spending on non-essential goods or shifted to purchasing lower-priced items.

Regarding inflation, overall prices rose moderately, with nine districts reporting moderate price increases, two reporting solid price increases, and one reporting slight price increases; compared to the previous reporting period, price increases were flat or slowed in all districts. Non-labor input costs rose in multiple sectors, including services, construction, and manufacturing, partly due to rising energy, transportation, and raw material costs. Consumer prices continued to rise, and some districts reported that contacts found their customers were more price-sensitive. Price growth expectations for the coming months varied across districts. Respondents in some districts anticipated inflation would continue at its current pace, while those in others expected it to slow, partly due to lower fuel prices.

Investors should infer that Federal Reserve officials, armed with this Beige Book report, will keep interest rates unchanged at their policy meeting in two weeks, which should boost risk appetite for buying gold on dips.

A long position can be established around $3,992, with a short-term target of $4,097 for profit-taking and a stop-loss at $3,972.

Gold Price 1-Hour Chart:

Ferris Kwok

Chief Analyst
Success Finance Group

Email: ferris.kwok@successfn.com