Gold prices fell on Wednesday after reaching a more than three-month high in the previous session, as investors awaited key U.S. inflation data for clues about the Federal Reserve’s interest-rate path.
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Spot gold fell 0.3% to $4,642.74 per ounce by 04:10 GMT. Prices had risen on Tuesday to their highest level since mid-May, following strong gains last week after the U.S. Treasury announced plans to buy back government bonds.
U.S. gold futures rose 0.1% to $4,700.70 per ounce.
Investors are awaiting the U.S. Personal Consumption Expenditures (PCE) Price Index for July, due at 12:30 GMT. The PCE index is the Federal Reserve’s preferred measure of inflation. Attention is also focused on Federal Reserve Chair Kevin Warsh, who is scheduled to speak Friday at the central bank’s annual symposium in Jackson Hole.
Wail Makarem, Head of Financial Markets Strategy at Exness, said gold would benefit most from lower-than-expected inflation data, combined with a dovish or balanced message from Warsh. Such a scenario could strengthen expectations for lower real yields and reduce the opportunity cost of holding a non-yielding asset such as gold.
He added that renewed concerns over the sustainability of U.S. public finances could also support gold, particularly following the Treasury’s recent bond buyback plans and their potential impact.
Data released earlier this month showed an unexpected decline in U.S. nonfarm payrolls, while consumer inflation data came in line with expectations, reducing market bets on an interest-rate hike in September.
Markets currently see a 61.6% probability that the Federal Reserve will leave interest rates unchanged next month, according to CME’s FedWatch tool.
On the geopolitical front, Iran said it had resumed talks with neighboring Oman over managing maritime traffic through the Strait of Hormuz, pushing oil prices lower.
International Monetary Fund Managing Director Kristalina Georgieva said the global economy had handled the energy shock caused by the Iran-U.S. war better than expected, but raised concerns about deteriorating public finances in some countries.
Reuters technical analyst Wang Tao said spot gold could retest resistance at $4,681 per ounce, with a break above that level potentially opening the way toward $4,707–$4,743.
Meanwhile, spot silver rose 0.9% to $69.26 per ounce, platinum gained 0.4% to $1,865.09, and palladium climbed 1.3% to $1,343.75.
