Gold dips as market awaits US inflation data

Gold prices edged lower on Wednesday as investors awaited the release of key US inflation data. The data, expected at 12:30 GMT, could significantly impact expectations for the Federal Reserve’s September policy meeting.

Spot gold dipped 0.2 per cent to $2,460.87 per ounce as of 03:27 GMT. This follows a record high of $2,483.60 reached last month. US gold futures mirrored the trend, falling 0.3 per cent to $2,500.30.

The US consumer price index (CPI) data for July is expected to show a slight acceleration in inflation to 0.2 per cent month-on-month, with the annual core rate potentially slowing down to 3.2 per cent. Retail sales data is scheduled for release on Thursday.

According to Kyle Rodda, a financial market analyst at Capital.com, gold could fall to $2,300 if the CPI data doesn’t support expectations of significant Fed rate cuts. However, he predicts a long-term rise in gold prices as the US economy weakens and prompts the Fed to cut rates more aggressively.

Tuesday’s data on US producer prices, which came in lower than expected, fueled market optimism for a Fed rate cut soon. Currently, traders see a 54 per cent chance of a 50-basis-point cut in September, based on CME FedWatch Tool data.

In the broader precious metals market, spot silver declined 0.6 per cent to $27.68, while platinum dipped 0.5 per cent to $931.73. Palladium bucked the trend, rising 0.1 per cent to $939.25 after reaching a multi-week high in the previous session.

Attribution: Reuters

Subediting: M. S. Salama