Gold prices fall from record highs, near $2,150 after hot CPI data
Gold prices steadied in Asian trade on Wednesday, but were nursing a tumble from record highs after a strong U.S. inflation reading kept fears of higher-for-longer interest rates in play
The yellow metal was also hit with a degree of profit-taking after surging as high as $2,200 earlier this week. While gold’s initial bounce was triggered by bets on early interest rate cuts by the Federal Reserve, Tuesday’s consumer price index data swiftly cooled those bets
Gold trades
Spot gold steadied at $2,159.32 an ounce, while gold futures expiring in April fell 0.1% to $2,164.45 an ounce . Both instruments were down about 2% each from record highs hit earlier this week
Spot gold hit a record high of $2,195.20 an ounce, while gold futures hit a peak of $2,203.0 an ounce on Monday.
CPI Data Spurs Rate Cut Speculation as Market Awaits Further Economic Indicators
In February, CPI data revealed that U.S. inflation slightly exceeded expectations, maintaining a level significantly above the Federal Reserve’s targeted 2% annual rate. This outcome reduces the urgency for the Fed to initiate interest rate cuts prematurely. Nonetheless, traders continue to hold expectations, as indicated by the CME Fedwatch tool, with a 70% likelihood of a 25 basis point cut in June.
The focus now shifts to forthcoming readings on the producer price index and retail sales, which will provide additional insights into the trajectory of the U.S. economy and potential implications for further rate adjustments. Any indications of economic resilience offer the Fed more flexibility to sustain higher interest rates for an extended period.
This prospect spells trouble for gold, as a robust U.S. economy is likely to diminish the metal’s appeal as a safe haven asset. However, despite these factors, gold has maintained significant gains thus far in 2024.
The precious metals market also faced pressure from the overnight surge in the U.S. dollar and Treasury yields. Platinum futures stabilized around $927.90 per ounce, while silver futures experienced a modest decline of 0.4%, settling at $24.297 per ounce
