Gold prices held firm on Wednesday as investors braced for US consumer price index data due later in the day for clues on the Federal Reserve’s latest monetary policy stance.
Spot gold held its ground at $4,165.25 per ounce, as of 0447 GMT. U.S. gold futures for December delivery edged 0.3% higher to $4,188.70.
“What we’re looking at here is not a big move, it’s within a range. But the fact that we are able to hold a range while oil is rallying suggests that gold is trying to find a reason to rally,” said Ilya Spivak, head of global macro at Tastylive.
On the geopolitical front, an administrative building belonging to Saudi Arabia’s state-owned oil company Saudi Aramco in the eastern city of Dhahran was attacked, the Energy Ministry said, as fighting between Yemen’s Iran-allied Houthis and the kingdom intensified. Oil prices scaled higher on the news on Wednesday.
If upcoming consumer price index data, producer price index data and retail sales data point to weaker economic momentum, markets may scale back expectations for further Fed rate hikes this year, providing a bullish catalyst for gold, Spivak added.
The US Consumer Price Index (CPI) report is due at 1230 GMT, followed by the Producer Price Index (PPI) and retail sales data on Thursday.
New York Fed President John Williams reaffirmed his view that the US central bank may need to raise interest rates once more this year in its bid to lower inflation.
Meanwhile, Fed Governor Christopher Waller said the recent rise in US bond yields reflects stronger economic growth rather than higher inflation expectations, which remain “well-anchored”.
Markets are pricing in about a 22% chance of a US rate hike this month and an 88% probability of an increase in December, according to CME’s FedWatch Tool.
Although gold is typically seen as a hedge against inflation, higher interest rates tend to diminish the appeal of non-yielding bullion to investors.
Among other metals, spot silver dipped 0.2% to $59.33 per ounce, platinum steadied at $1,663.16 and palladium gained 0.7% to $1,133.49.