NEW YORK: Gold prices slipped on Wednesday after a rise in US consumer prices boosted the likelihood of the Federal Reserve maintaining higher interest rates, but safe-haven bullion pared much of the earlier losses as trade war concerns kept investors on the edge.
Spot gold eased 0.2% to $2,893.87 per ounce as of 09:58 a.m. ET (1458 GMT). US gold futures fell 0.4% to $2,920.60. Prices dropped over 1% after data showed the US consumer price index jumped 0.5% last month, more than expected, reinforcing the Fed message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.
“With today’s CPI data coming in hotter-than-expected, that has put weight on the gold market. Obviously at this point, any expectation that the market would have had of any type of rate cut later this year has now been put down,” said David Meger, director of metals trading at High Ridge Futures. Higher interest rates tend to weigh on bullion, increasing its opportunity cost as it yields no interest. While, “higher interest rate storyline provided a little bit of pressure on gold, the trend remains positive and trade concerns continue to drive the market,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
After raising steel and aluminium tariffs to 25% earlier this week, US President Donald Trump’s advisers are now finalising plans for reciprocal tariffs.
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