Despite trading above a more than two-week low set the previous session, gold prices fell on Wednesday as investors awaited U.S. inflation data that may influence views for the Federal Reserve’s interest rate stance.
At $1,906.50 per ounce on Tuesday, spot gold reached its lowest level since August 25. By 0308 GMT, it had fallen 0.2% to $1,908.70 per ounce. To $1,931.10, U.S. gold futures saw a 0.2% decline.
Tim Waterer, the chief market analyst at KCM Trade, wrote in a note that “any upside surprises in the U.S. inflation data could have gold being pressured below the $1,900 level again.”
Expectations are that the headline inflation figures will be higher due to the rising cost of electricity. [O/R]
Waterer continued, “On the other hand, if the energy price impact is not as significant as anticipated in the data, we might see a reversal in yields and an opening for gold to move higher.
The Consumer Price Index (CPI) data for the United States, which is coming at 12:30 GMT, may provide some information about future rate hikes from the Fed.
While the Fed is anticipated to maintain interest rates constant at its policy meeting on September 19–20, economists poll predict that it won’t decrease rates until the April–June period of 2024 or later.
The European Central Bank anticipates that inflation will continue above 3% in 2019, which strengthens the case for Thursday’s ninth consecutive increase in interest rates.
As the opportunity cost of storing non-yielding bullion increases, gold is quite sensitive to rising interest rates.
spot gold may retest a support at $1,905 per ounce, with a significant risk of breaking below this level and sliding below $1,898.
Other price declines included spot silver, which fell 1% to $22.88 per ounce, platinum, which lost 0.8% to $903.09, and palladium, which declined 0.9% to $1,229.71.