Gold Declines as Investors Await US Inflation Data
Gold declined on Wednesday after reaching its highest level in over three months in the previous session, as investors awaited a key US inflation report to gauge the direction of interest rates. By 04:10 GMT, spot gold prices fell by 0.3% to $4642.74 per ounce. Prices had risen on Tuesday to their highest since mid-May, following sharp gains last week after the US Treasury announced a bond buyback. Meanwhile, US gold futures rose 0.1% to $4700.70. Data on the US Personal Consumption Expenditures Price Index for July, the Federal Reserve's preferred inflation gauge, is scheduled for release at 12:30 GMT. Attention is also focused on Federal Reserve Chair Jerome Powell’s speech on Friday at the Jackson Hole symposium hosted by the central bank. Wael Makarem, Head of Market Strategies at Exness, said the most supportive outcome for gold would be weaker-than-expected inflation data combined with a dovish or balanced message from Powell, boosting expectations of lower real yields and reducing the opportunity cost of holding a non-yielding asset. He added that renewed concerns about the sustainability of US fiscal finances could also be a significant factor for gold, especially given recent Treasury bond buyback plans and their market impact. The CME Group’s FedWatch tool indicates a 61.6% probability that the Federal Reserve will keep interest rates unchanged next month. On the geopolitical front, Iran announced it has resumed talks with Oman regarding the management of the Strait of Hormuz, which contributed to a drop in oil prices. IMF Managing Director Kristalina Georgieva stated that the global economy is handling the energy shock from the Iran conflict better than expected, but expressed concerns over deteriorating financial conditions in some countries. Technically, analyst Wang Tao from Reuters noted that gold may retest resistance at $4681 in spot trading, with a break above this level potentially leading to gains in the $4707 to $4743 range. Other precious metals saw gains as well, with spot silver up 0.9% to $69.26, platinum rising 0.4% to $1865.09, and palladium increasing 1.3% to $1343.75.
