Gold prices showed little movement during Asian trading on Wednesday, as traders adopted a cautious stance ahead of the highly anticipated U.S. consumer inflation data. While the dollar’s mild declines provided some support to gold, prices remained largely rangebound.
Gold had gained momentum following softer-than-expected producer inflation data from the previous day, which fueled expectations that inflation might ease further in the coming months. This sentiment led to a weaker dollar. However, the precious metal’s upward movement was limited due to subdued demand for safe-haven assets and concerns over slower interest rate cuts by the U.S. Federal Reserve.
Spot gold inched up by 0.1%, trading at $2,675.90 per ounce, while February gold futures saw a modest 0.3% rise, reaching $2,690.91 per ounce at 23:59 ET (04:49 GMT).
Market Awaits CPI Data for Clues on Interest Rates
The markets are now focused on the release of the U.S. consumer price index (CPI) inflation data, scheduled for later on Wednesday, as investors seek further guidance on the Federal Reserve’s interest rate policy.
The CPI reading is expected to show a slight increase in inflation for December, adding to concerns that U.S. interest rates may remain elevated due to persistent inflation. While softer-than-expected producer price index (PPI) data had eased some of these concerns, key components tied to the Fed‘s preferred inflation gauge, the PCE price index, continued to signal underlying inflationary pressures.
The Federal Reserve has indicated a more gradual pace of rate cuts in 2025, citing concerns over a strong labor market and persistent inflation. Last week’s strong payrolls data added to these concerns. Additionally, policymakers are reportedly concerned about the inflationary effects of trade tariffs under incoming President Donald Trump, although recent reports suggest his administration is preparing a plan for gradual tariff increases.
Higher interest rates tend to weigh on non-yielding assets like gold, as they raise the opportunity cost of holding such investments. This dynamic has kept gold trading within a narrow range of $2,600 to $2,700 per ounce over the past month.
Precious Metals Mixed; Copper Prices Dip
In other precious metals, platinum futures fell 0.5% to $944.75 per ounce, while silver futures edged up by 0.2%, reaching $30.427 per ounce.
Among industrial metals, copper prices lost momentum after a strong start to 2025, driven by expectations of increased stimulus measures in China, the top importer of the metal. Benchmark copper futures on the London Metal Exchange dropped 0.6%, trading at $9,101.50 per ton, while March copper futures fell 0.4%, reaching $4.3293 per pound.
Despite weaker economic data from China, which spurred hopes for additional stimulus from Beijing, the latest import data showed that China’s copper imports reached a 13-month high in December, signaling continued strong demand for the metal. The focus this week is on the People’s Bank of China’s decision regarding its benchmark loan prime rate, which is due on Thursday.
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