On Wednesday, gold prices continued to trade around the critical $2,000-per-ounce level. Spot gold was unchanged at $1,992.21 per ounce as of 04:29 GMT. Meanwhile, U.S. gold futures decreased by 0.1 percent, reaching $2,005.00 per ounce.
In the previous trading session, spot gold slid to $1,993.29, the lowest price that the commodity recorded since December 13. This figure represents a 1.4 percent decline.
These movements in gold prices can be attributed to the stronger-than-expected U.S. Consumer Price Index (CPI) inflation report. The new economic data prompted investors to reduce expectations for substantial Federal Reserve (Fed) rate reductions.
Higher than expected
According to the new CPI report, consumer prices in January surged 3.1 percent year-on-year. This number is against the 2.9 percent prediction by analysts surveyed by Reuters. This higher-than-expected increase placed downward pressure on gold.
As emphasized by Kelvin Wong, a senior market analyst for Asia Pacific at OANDA, this new development pushes back the expected timing of the Fed’s first rate cut. Apart from affecting the timing, it also reduces the anticipated total of cuts by the end of the year.
Now, investors would have to watch the $1,975 per ounce as the next significant support level for spot gold.
More economic data out this week
Apart from inflation and interest rate data, market participants are also monitoring other essential economic data that could affect gold prices. The U.S. Retail Sales data will be out on Thursday, while the U.S. Producer Price Index (PPI) report will be released on Friday.
Additionally, at least five Fed officials will speak this week, providing more market insights.
Other precious metals have remained stable after the unveiling of the new CPI data. Spot platinum was steady at $871.90 per ounce. On the other hand, palladium and silver posted modest losses, decreasing by 0.2 percent to hit $862.14 and $22.04, respectively.
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