Gold prices extended their losses for the fourth consecutive session on Wednesday, weighed down by a stronger U.S. dollar and climbing Treasury yields. The downward pressure followed the release of U.S. inflation data, which showed that October’s consumer prices increased as expected, leading to concerns that inflation is not easing as quickly as hoped. The U.S. Labor Department’s report also indicated that the progress toward lower inflation has slowed since mid-year, raising the likelihood that the Federal Reserve will be less aggressive in cutting interest rates next year.
By 1:49 p.m. ET, spot gold had fallen 0.7%, trading at $2,580.39 per ounce, after reaching a near two-month low earlier in the session. Meanwhile, U.S. gold futures settled 0.8% lower at $2,586.50 per ounce. The dollar surged, advancing near a seven-month high against major currencies, while the benchmark U.S. 10-year Treasury yield also climbed, further dampening the appeal of non-yielding gold.
Zain Vawda, a market analyst at MarketPulse by OANDA, explained that while the Consumer Price Index (CPI) met expectations, its release had a mixed effect on gold prices. “The CPI increased but met expectations, leading to a mixed impact on gold prices. Markets have increased their bets on a potential 25 basis points interest rate cut in December,” Vawda said. According to the CME FedWatch tool, traders are now pricing in an 82% chance of a Fed rate cut in December, up from 58% before the data was released.
However, there is also growing concern that inflationary pressures could escalate if new tariffs are implemented under a potential second term for former President Trump, leading some investors to believe that the Federal Reserve might pause its easing cycle. Vawda noted that in the short term, there is potential for gold prices to recover slightly to around $2,650 per ounce, but a further decline could follow in the longer term.
Looking ahead, key economic data will be released this week, including the U.S. Producer Price Index (PPI) and weekly jobless claims on Thursday, followed by retail sales data on Friday. Additionally, remarks from Federal Reserve Chair Jerome Powell and other central bank officials will be closely watched for any signs of future policy changes.
Jim Wyckoff, a senior market analyst at Kitco Metals, noted that gold bulls’ next price objective is to close above $2,700, while bears are targeting a push below the strong technical support level of $2,500. In other precious metals, spot silver fell 0.5% to $30.55 per ounce, platinum slipped 0.9% to $938.60 per ounce, and palladium dropped 1.3% to $932.10 per ounce.
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