Gold prices fell on Wednesday and were on track for a monthly decline as expectations of higher interest rates weighed on market sentiment, while investors awaited US inflation data for clues about the Federal Reserve’s next policy move.
Spot gold fell 0.2% to $4,170.63 an ounce by 01:50 GMT, down more than 6% since the start of the month.
US gold futures rose 0.5% to $4,201.90.
The dollar is heading for monthly gains, making dollar-denominated metals more expensive for holders of other currencies.
The US Personal Consumption Expenditures (PCE) price index is due at 12:30 GMT.
“The release of the PCE data will be an important test for gold, as it could influence expectations for US monetary policy as well as the direction of Treasury yields and the dollar,” said Tony Sycamore, CEO of Critical Metals.
“A weaker reading is likely to support gold and pave the way for a return to the $4,200-$4,300 range, while a stronger reading could push yields and the dollar higher, putting renewed pressure on gold and testing the $4,100 level,” he added.
Higher interest rates typically reduce the appeal of gold because it does not generate income.
According to CME Group’s FedWatch tool, traders see a 47% probability of the Federal Reserve raising interest rates in October and a 91% probability of a hike in December. The US central bank raised rates by 25 basis points this month.
Meanwhile, New York Federal Reserve President John Williams said policymakers may need to raise interest rates only once this year to put inflation back on track toward the central bank’s 2% target.
On the geopolitical front, Qatar expressed hope that its diplomatic mediation efforts between Iran and the United States would lead to a breakthrough, despite President Donald Trump denying reports that he was prepared to ease sanctions on Tehran and release frozen Iranian funds in exchange for concessions on its nuclear program.
Among other precious metals, spot silver fell 0.8% to $60.98 an ounce, platinum was steady at $1,705.10, and palladium declined 0.3% to $1,219.60. All three metals were heading for monthly declines.
Source: Reuters
