Gold prices edged lower on Wednesday as an uptick in the dollar and Treasury yields limited bullion’s appeal, with investors looking ahead to US inflation data for more direction on interest rates.
Spot gold was down 0.2% at $1,848.75 per ounce, as of 0302 GMT, while US gold futures were flat at $1,851.20.
“Gold has been treading water pretty much the last few weeks. I think the reason is that people are probably getting a little optimistic about some of the inflation readings,” said Edward Meir, an analyst with ED&F Man Capital Markets.
“We’re not seeing gold really making its move and it’s because there is a perception that we’re approaching peak inflation … Gold needs to see progressively higher inflation readings … But if inflation sort of levels off, it’s not good for gold.”
Bullion is used as a hedge against inflation, but higher interest rates increase the opportunity cost of holding the non-yielding asset.
Gains in gold have been largely capped as central banks worldwide tightened monetary policy to cool surging prices.
Investors now await the core consumer price index (CPI) data due on Friday for implications on US interest rates.
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The CPI is expected to have gained 5.9% on the year, after an annual rise of 6.2% in April, according to the median estimate of economists polled by Reuters.
In other metals, platinum dipped 0.1% to $1,009.85 an ounce and palladium rose 0.8% to $2,000.19. Silver eased 0.3% to $22.14.
“ETF outflows have gathered pace across platinum and silver products. Slower auto sales, concerns around slower growth and the risk of recession are starting to weigh on demand prospects for much of the complex,” Standard Chartered wrote in a note.
The World Bank slashed its 2022 global growth forecast on Tuesday by nearly a third to 2.9%.
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