Gold futures extended their decline for the second consecutive session on Wednesday, settling at a fresh three-week low. According to Dow Jones Market Data, the most-active contract prices reached their lowest point since August 22, 2023.
The decline in gold prices coincided with the release of the latest U.S. consumer price index (CPI) data, which failed to provide clarity on the Federal Reserve’s policy outlook. December gold (GCZ23) slid by $2.60, or 0.1%, to settle at $1,932.50 per ounce on Comex.
Han Tan, Chief Market Analyst at Exinity, commented on the situation, noting that the recent uptick in core CPI figures may keep alive the possibility of another Federal Reserve interest rate hike. Tan emphasized that these expectations could constrain the short-term upside potential for gold. He explained, “As long as hopes for Federal Reserve rate cuts remain subdued, bullish sentiment for bullion is likely to face challenges in achieving significant gains.”
The Federal Reserve’s monetary policy decisions exert significant influence on gold prices, as higher interest rates typically diminish the appeal of non-yielding assets like gold. Consequently, the prevailing uncertainty surrounding the Federal Reserve’s policy direction appears to be exerting downward pressure on gold futures.
