Gold prices traded flat on Wednesday as investors looked forward to a critical US inflation print that could offer clues on the Federal Reserve’s interest rate cut trajectory.
Spot gold held its ground at $2,359.02 per ounce, as of 0314 GMT, trading in a narrow $5 range, after gaining 1% on Tuesday.
US gold futures rose 0.2% to $2,364.60.
The US consumer price index data is due at 1230 GMT.
According to a Reuters poll, the data is expected to show that core inflation in April rose 0.3% month-over-month, down from 0.4% the prior month.
Gold is data-dependent at the moment, “if the CPI starts to come down a little bit, it will be positive for gold as it is in a fantastic position to capitalize on that dynamic considering its resilience to this point,” said Kyle Rodda, a financial market analyst at Capital.com.
But, “if CPI comes higher than expected then that’s going to really rattle all the markets and the confidence that rates can be cut.”
Last week’s lacklustre jobs report and a softer-than-expected US payrolls report for April have increased expectations for rate reductions by September.
Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.
Fed Chair Jerome Powell said on Tuesday that he expects US inflation to continue declining through 2024 and noted it was unlikely the central bank would have to raise interest rates again.
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However, data on Tuesday showed that US producer prices increased more than expected in April.
Spot silver dipped 0.1% to $28.57 per ounce and palladium gained 1.5% to $992.84.
Platinum climbed 2.3% to $1,054.36, hitting a near one-year high.
Australian-listed shares of BHP Group, the world’s largest miner, rose 2.4 after its takeover target Anglo American announced a break-up plan to defend itself against a $43 billion offer.
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