Gold prices settle as investors await US inflation data


(MENAFN) In early trading on Wednesday, gold
prices stabilized as market participants awaited crucial inflation data from the United States, which could offer insights into the trajectory of interest rates. Spot gold
transactions settled at USD2,357.35 per ounce, maintaining a narrow trading range of six dollars following a one percent increase on Tuesday. Similarly, US gold
futures edged up by 0.1 percent to reach USD2,362.80 per ounce.

The focus of investors shifted towards the impending release of the US Consumer Price Index (CPI) data, scheduled for 1230 GMT. Analysts anticipate that the data will reveal a 0.3 percent monthly rise in core inflation for April, a slight decrease from the previous month's 0.4 percent. Kyle Rodda, a financial markets analyst at Capital.com, emphasized the data-driven nature of gold
's movements at present, noting that a decline in the CPI could bolster gold
's position, given its resilience in the current market environment.

Rodda elaborated that an unexpected increase in the consumer price index could potentially unsettle markets and erode confidence in the prospect of interest rate reductions. While gold
traditionally serves as a hedge against inflation, higher interest rates diminish the opportunity cost associated with holding the precious metal.

Federal Reserve Chairman Jerome Powell weighed in on the inflation outlook during remarks on Tuesday, expressing expectations for a continued decline in US inflation throughout 2024 and signaling that further interest rate hikes are unlikely. However, recent data revealed a higher-than-expected increase in US producer prices for April, adding a layer of complexity to the inflation narrative.

In addition to gold
, movements in other metals were observed in the market. Silver experienced a marginal decline of 0.1 percent in spot transactions, settling at USD28.57 per ounce, while palladium saw a gain of 1.3 percent to reach USD990.06. Platinum exhibited more significant movement, rising by 2.2 percent to USD1,053.75 per ounce, marking its highest level in nearly a year.

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