Gold prices slipped on Wednesday after hitting their highest level in more than three months a day earlier, as investors waited for key US inflation data that could shape expectations for the Federal Reserve’s next interest rate decision.
Spot gold fell 0.3 per cent to $4,642.74 an ounce by 0410 GMT, while US gold futures rose 0.1 per cent to $4,700.70.
Gold had climbed sharply on Tuesday, reaching its highest level since mid-May. The rally followed strong gains last week after the US Treasury announced plans to buy back some of its debt, adding to investor concerns over the country’s fiscal position.
The market’s next major focus is the July Personal Consumption Expenditures price index, the Fed’s preferred inflation measure. The data is due at 1230 GMT and could offer fresh clues about whether the central bank is likely to change interest rates next month.
Investors are also watching Fed Chairman Kevin Warsh’s speech at the Jackson Hole symposium on Friday.
Wael Makarem, financial markets strategist lead at Exness, said softer inflation and a dovish or balanced message from Warsh would be positive for gold. Lower interest rates tend to support gold because they reduce the cost of holding an asset that does not pay interest.
Recent US economic data has already reduced expectations of a September rate hike. Nonfarm payrolls fell unexpectedly earlier this month, while consumer inflation remained broadly in line with forecasts.
Traders now see a 61.6 per cent chance that the Fed will keep rates unchanged next month, according to the CME FedWatch Tool.
Meanwhile, Iran said it had resumed talks with Oman over the Strait of Hormuz, putting pressure on oil prices. IMF Managing Director Kristalina Georgieva said the global economy had handled the energy shock linked to the Iran war better than expected, but warned about worsening fiscal conditions.
Other precious metals moved higher. Silver gained 0.9 per cent to $69.26 an ounce, platinum rose 0.4 per cent to $1,865.09 and palladium increased 1.3 per cent to $1,343.75.
Technical analyst Wang Tao said gold could retest $4,681. A break above that level may push prices towards $4,707 to $4,743.
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