Gold prices remained steady on Wednesday as investors awaited the release of crucial U.S. inflation data, which could provide insights into the Federal Reserve’s approach to interest rate adjustments.
As of 0704 GMT, spot gold maintained its position at $2,359.99 per ounce, trading within a narrow range of $6 following a 1% increase on Tuesday. U.S. gold futures saw a slight uptick of 0.2% to reach $2,365.50.
The eagerly anticipated U.S. consumer price index data is scheduled for release at 1230 GMT. Analysts surveyed by Reuters anticipate a 0.3% month-over-month rise in core inflation for April, a slight decrease from the previous month’s 0.4%.
Kyle Rodda, a financial market analyst at Capital.com, emphasized the significance of the impending CPI figures, noting that if inflation moderates, it could bode well for gold, given its current resilience. Conversely, a higher-than-expected CPI could unsettle markets and shake confidence in potential rate cuts.
Market sentiment has been influenced by recent economic indicators, including a lackluster jobs report and softer U.S. payrolls data for April, fueling expectations of rate reductions by September. While gold is traditionally seen as a hedge against inflation, higher interest rates raise the opportunity cost of holding the non-yielding asset.
Federal Reserve Chair Jerome Powell expressed confidence on Tuesday that U.S. inflation would continue to decrease through 2024 and indicated skepticism regarding the necessity of further interest rate hikes. However, Tuesday’s data revealed that U.S. producer prices rose more than anticipated in April.
In other precious metal markets, spot silver edged up by 0.3% to $28.67 per ounce, while palladium saw a gain of 1.4% to $991.39. Platinum experienced a more substantial increase, climbing 1.9% to $1,050.57, reaching its highest level in nearly a year.
Meanwhile, Australian-listed shares of BHP Group, the world’s largest miner, rose by 2.4% following news of a defensive restructuring plan by takeover target Anglo American in response to a $43 billion acquisition offer.
