Gold prices stabilize before US inflation data release

(MENAFN) On Wednesday, Gold prices stabilized as market participants eagerly anticipated the release of inflation data in the United States, which could offer insights into the trajectory of future interest rates. Spot gold traded at USD2,357.35 per ounce by 06:00 GMT, remaining within a narrow USD6 range following a 1 percent increase recorded on Tuesday. Similarly, US gold futures edged up by 0.1 percent, reaching USD2,362.80 per ounce.

The upcoming release of US Consumer Price Index (CPI) data at 12:30 GMT is poised to be a significant market mover. According to a Reuters poll, analysts expect core inflation in April to have risen by 0.3 percent month-on-month, a slight decrease from the 0.4 percent recorded in the previous month.

Kyle Rodda, a financial markets analyst at, emphasized the current dependency of gold prices on economic data, highlighting the potential impact of CPI figures on market sentiment. Rodda explained that a decline in the CPI could bolster gold prices, as the precious metal is well positioned to benefit from such developments given its resilience. Conversely, a higher-than-expected CPI could trigger volatility across markets and erode confidence in the likelihood of interest rate cuts.

Gold is traditionally considered a hedge against inflation, yet the attractiveness of holding the yellow metal diminishes in environments characterized by high interest rates due to opportunity costs. Jerome Powell, Chairman of the Federal Reserve, indicated on Tuesday that he anticipates inflation to continue its downward trajectory throughout 2024 in the United States. Powell reiterated the central bank's stance of reluctance towards further interest rate hikes, underscoring the potential implications for gold prices amidst evolving monetary policy dynamics.



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