Gold edged lower on Wednesday after strong US inflation data dampened speculation of near-term
interest rate cuts, with investors also focused on an upcoming
meeting between U.S. President Donald Trump and Chinese
counterpart Xi Jinping.
Spot gold was down 0.4% to $4,694.59 per ounce at
0946 GMT, retreating from a three-week high hit in the last
session. U.S. gold futures for June delivery gained 0.3%
to $4,702.40.
The dollar hit a more than one-week high, making
dollar-priced bullion expensive for holders of other currencies.
US consumer inflation rose further in April, with the
annual rate posting its largest gain in three years, as higher
oil prices triggered by the U.S.-Israeli war on Iran pushed
costs up, data on Tuesday showed.
“Yesterday’s higher inflation data is expected to keep the
Federal Reserve on hold longer, but still with easing bias. That
is likely to keep (gold) trending sideways in the short term,”
said UBS analyst Giovanni Staunovo.
“In general U.S. economic data will influence gold, if we
see some growth slowdown that should support the yellow metal.”
Investors are now awaiting U.S. producer price inflation
data for April, due later in the day.
The Middle East conflict remained at an impasse after Trump
said on Tuesday he did not expect to need China’s help to end
the war with Iran, ahead of his meeting with Xi later this week.
Gold has fallen more than 10% since the Iran war began late
February, as elevated oil prices fuelled concerns about
inflation and higher-for-longer interest rates.
While gold is seen as a hedge against inflation, high rates
tend to weigh on the non-yielding asset.
Traders have largely priced out a U.S. rate cut this year
and now see a 29% chance of a hike in December, according to CME
Group’s FedWatch tool.
Spot silver fell 0.1% to $86.61 per ounce, after
hitting its highest level since March 11 earlier in the session.
Platinum slid 0.1% to $2,123.80, and palladium was
down 0.1% at $1,489.18.