Gold prices continued their decline on Wednesday as the dollar rose ahead of key U.S. inflation data due this week, which could offer more insight into the timing of the Federal Reserve‘s first interest rate cut this year.
In the UAE, gold prices saw an AED1 decline with 24-carat gold inching down to AED280.50 per gram, while 22-carat gold declined to AED259.75. Twenty-one-carat gold declined to AED251.50 while 18-carat gold reached AED215.50.
Globally, spot gold saw a 0.14 percent decline to $2,317.04 per ounce, as of 5:10 GMT. Meanwhile, U.S. gold futures lost 0.11 percent to $2,328.30.
The dollar rose 0.1 percent, making gold more expensive for other currency holders. Meanwhile, benchmark 10-year treasury yields also edged higher.
Stronger U.S. dollar impacts gold
Higher 10-year treasury yields and a stronger U.S. dollar in addition to comments from Fed officials have impacted gold prices in early trading.
U.S. Fed governor Michelle Bowman recently restated her view that keeping interest rates steady will likely be enough to decrease inflation. However, she reiterated her willingness to raise rates if needed. Meanwhile, Fed governor Lisa Cook stated that at some point it will be time to cut interest rates.
Markets now await the first quarter’s gross domestic product data, due on Thursday, and the personal consumption expenditures (PCE) price index report on Friday for hints on the timing of the first interest rate cut this year.
If PCE data reveals a rise in inflation, uncertainty regarding the Fed’s next policy move with growth, further impacting gold prices. Thus, higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
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Other precious metals
In addition to the decline in gold prices, spot silver was down 0.03 percent to $28.91. However, platinum rose 0.72 percent to $988.80 while palladium lost 0.77 percent to $940.54.
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