Gold prices saw a marginal decline on Wednesday as investors eyed the release of key U.S. inflation data which could offer more insight into the Federal Reserve‘s rate cut trajectory.
Spot gold saw a 0.06 percent decline to $2,356.69 per ounce, as of 5:18 GMT, after gaining 1 percent on Tuesday. Meanwhile, U.S. gold futures saw a 0.06 percent rise to $2,361.35.
Inflation to decline
Investor attention now centers on the upcoming release of the U.S. consumer price index data at 12:30 GMT. Analysts and market participants are eager to gain insights into the trajectory of the Federal Reserve’s interest rate cuts. Analysts expect core inflation in April to rise 0.3 percent from 0.4 percent in March.
The current market sentiment underscores the dependence of gold prices on economic factors. Hence, a decline in inflation indicators could bode well for the precious metal. However, a higher-than-expected CPI could unsettle markets and confidence in a potential interest rate cut.
Federal Reserve chair Jerome Powell’s recent remarks have indicated an expectation for U.S. inflation to continue declining through 2024. Powell also expressed skepticism about the need for further interest rate hikes. However, recent data revealing an increase in U.S. producer prices in April has added complexity to the U.S. inflation outlook.
Markets often consider gold as a hedge against inflation. However, higher rates increase the opportunity cost of holding non-yielding assets such as gold.
Read: Oil prices rise amid drop in U.S. inventories, inflation concerns
Other precious metals
In addition to gold prices, spot silver saw a decline of 0.12 percent to$28.56, while palladium saw a notable gain of 1.26 percent, reaching $990.25, Meanwhile, Platinum surged by 2.44 percent to $1,056.30, hitting almost a one-year high.
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