Gold ticks lower, US inflation data in spotlight
- Spot gold eased 0.3% to $4,642.74 per ounce
Gold prices eased after reaching a three-month high as investors await key US inflation data and Federal Reserve signals to gauge the future interest rate path.
- Upcoming US inflation report and Fed Chairman's speech.
- Impact of US fiscal sustainability on gold prices.
- Traders' expectations for the Federal Reserve's interest rate decisions.
Gold eased on Wednesday after scaling a more than three-month high in the previous session, as investors awaited a key US inflation report to gauge the Federal Reserve’s interest-rate path.
Spot gold eased 0.3% to $4,642.74 per ounce, by 0410 GMT.
Prices climbed to their highest since mid-May on Tuesday after last week’s sharp gains following the US Treasury’s bond buyback announcement.
US gold futures rose 0.1% at $4,700.70.
The Fed’s preferred inflation gauge, the US Personal Consumption Expenditures (PCE) price index for July, is due at 1230 GMT.
Attention is also on Fed Chairman Kevin Warsh’s speech on Friday at the central bank’s Jackson Hole symposium.
“For gold, the most supportive outcome would be softer-than-expected inflation combined with a dovish or balanced message from Warsh, reinforcing expectations for lower real yields and reducing the opportunity cost of holding a non-yielding asset,” said Wael Makarem, financial markets strategists lead at Exness.
“A renewed deterioration in confidence around US fiscal sustainability could also be important (for gold), particularly given the recent Treasury buyback plans and their impact.”
Earlier this month, data showed an unexpected decline in U.S. nonfarm payrolls and in-line consumer inflation, tempering expectations of a September rate hike.
Traders are pricing in a 61.6% chance that the Fed will leave rates unchanged next month, according to the CME FedWatch Tool.
On the geopolitical front, Iran said it had restarted talks with neighbour Oman to manage the Strait of Hormuz, sending oil prices lower.
The global economy has weathered the Iran war energy shock better than feared, International Monetary Fund Managing Director Kristalina Georgieva said.
However, she raised concerns about deteriorating fiscal conditions in some countries.
Spot gold may retest a resistance at $4,681, a break above which may trigger a gain into the range of $4,707 to $4,743, according to Reuters technical analyst Wang Tao.
Spot silver gained 0.9% to $69.26, platinum rose 0.4% to $1,865.09 and palladium firmed 1.3% to $1,343.75.