Everything You Need to Know on Wednesday: Gold Surges to Record $2,470 as Rate Cut Expectations Increase

Good morning mooers! Here are things you need to know about today's market:

● S&P/TSX 60 Index Standard Futures are trading at 1,362.80, down 0.53%

● BMO sees "Just Enough to Cut" rates in Tuesday's CPI

● Gold surges to record $2,470 as rate cut expectations increase

● TD Bank edges lower as it expects $190M impact from Charles Schwab's Q2 earnings on its Q3 results

Today, the Canadian dollar is trading at 73.14 cents US, a slight increase from previous close.

S&P/TSX 60 Index Standard Futures are trading at 1,362.80, down 0.53% from previous.

BMO's Benjamin Reitzes observed that Canada's June CPI report showed inflation cooling more than expected to 2.7% year over year, with a month-to-month price drop influenced by declines in clothing, recreation, and gasoline prices.

However, Reitzes pointed out that the Bank of Canada's (BoC) favored core inflation indicators were less promising. The trimmed mean remained at 2.9% year over year, while the median inched down to 2.6%. He also mentioned that the six-month annualized core CPI rates for both BoC measures have slowed to just over 2%, despite a slight uptick in the three-month rates, which stayed under 3%.

Considering the softer inflation data, alongside a weaker Business Outlook Survey, rising unemployment, and sustained growth below potential, Reitzes believes that the June inflation report supports a change in prediction for the upcoming BoC meeting to a 25 basis point reduction in interest rates.

Gold prices soared to all-time highs on Wednesday, fueled by speculation of a Federal Reserve rate cut in September. Spot gold climbed 0.2% to $2,478.65 per ounce, and August futures reached $2,483.65 per ounce.

The gold rise is largely attributed to the anticipation of Fed rate reductions following soft inflation data and indications of a dovish Fed stance, with markets now foreseeing over a 90% likelihood of a 25 basis point cut in September and entertaining the possibility of a 50 basis point cut.

Fed Chair Jerome Powell's recent comments on easing inflation and the central bank's readiness to cut rates before reaching the 2% inflation target have reinforced these expectations. Weaker retail sales data has also hinted at a slowing U.S. economy.

Lower interest rates tend to favor gold, reducing the relative cost of investing in precious metals. Consequently, the dollar dropped to a one-month low, enhancing the appeal of gold and other precious metals; platinum futures edged up to $1,016.80 an ounce, and silver futures increased 0.3% to $31.543 an ounce.

After adjusting for approximately $5 million in after-tax acquisition-related charges and about $30 million in after-tax amortization of acquired intangibles, the adjusted equity in net income from its Schwab investment is expected to be around $225 million.

The bank is set to publish its Q3 financial results and conduct an earnings conference call on August 22.