Gold prices remained steady on Wednesday, following a decline in the previous session, as higher-than-expected U.S. inflation figures cast doubt on the possibility of a mid-year interest rate cut by the Federal Reserve.
The spot gold price showed little change at $2,157.88 per ounce, as of 0438 GMT, while U.S. gold futures dropped by 0.1 percent to $2,163.20.
Gold prices in the UAE started on a positive note on Wednesday, recovering from a drop of nearly AED3 per gram observed on Tuesday. 24K gold was recorded at AED261.50 per gram, showing a slight increase from the previous night’s closing price of AED261 per gram. Other variants of gold also saw opening prices, with 22K at AED242, 21K at AED234.25, and 18K at AED200.75 per gram.
Read more: Gold dips slightly as traders await key U.S. inflation report
The recent decrease in gold prices can be attributed to the impact of inflation data on the decision-making process of the Federal Reserve, according to Michael Langford, chief investment officer at Scorpion Minerals Ltd. Langford anticipates a correction of approximately 10 percent in gold prices from this point.
On Tuesday, gold experienced its largest single-day decline since February 13th, following the release of data indicating higher-than-expected consumer prices for February. As a result, traders have slightly reduced their expectations for a rate cut in June, with the probability dropping from 72 percent to 67 percent according to LSEG’s interest rate probability app.
The rise in U.S. Treasury yields and the strengthening of the U.S. dollar were influenced by the inflation reading.
Other precious metals experience slight declines
Additionally, the 10-year Treasury yield received a boost due to weak demand during an auction of $39 billion of the benchmark note. In the meantime, market observers kept a close watch on the attacks on Russia’s energy infrastructure originating from Ukraine. Other precious metals also experienced slight declines, with spot platinum falling by 0.1 percent to $923.45 per ounce, palladium dropping by 0.5 percent to $1,036.44, and silver shedding 0.3 percent to $24.08.
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