Gold prices fell on Wednesday as the dollar index rose while the market awaited the release of U.S. inflation data this week, which could provide additional insight into the size of the Federal Reserve‘s September interest rate cut.
In the UAE, gold prices lost AED0.25 with 24-carat gold inching down to AED304 and 22-carat gold declining to AED281.50. Meanwhile, 21-carat gold reached AED272.50 and 18-carat gold hit AED233.75.
Globally, spot gold fell 0.58 percent to $2,511.09 as of 5:06 GMT after hitting a record high of $2,531.60 on August 20. Meanwhile, U.S. gold futures declined 0.31 percent to $2,545.
The dollar index rose 0.21 percent to 100.77, making gold less attractive for other currency holders.
U.S. PCE data
Gold prices declined as the market maintained a wait-and-see mode, waiting for factors that could propel gold prices above their latest record high. Market analysts say that the short-term outlook for gold prices remains strong with the potential to hit a new high.
Markets now await the release of the U.S. personal consumption expenditure (PCE) data, the Federal Reserve’s preferred measure of inflation, on Friday.
Traders have fully priced in a rate cut next month, with a 67 percent chance of a 25-basis-point cut and a 33 percent chance of a bigger 50-basis-point reduction, according to the CME FedWatch tool. Lower interest rates tend to boost non-yielding bullion’s appeal.
Last week, Fed Chair Jerome Powell supported policy easing and expressed confidence that inflation is within reach of the U.S. central bank’s 2 percent target. A report on Tuesday revealed that U.S. consumer confidence rose to a six-month high in August, however, labor market concerns still persist.
Elsewhere, data revealed that China’s net gold imports through Hong Kong rose by about 17 percent month-on-month in July, the first increase since March.
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Other precious metals
Amid the decline in gold prices, the precious metals market saw mixed movement on Wednesday. Spot silver fell 0.63 percent to $29.80 while platinum rose 0.07 percent to $954.20. palladium declined 0.45 percent to $965.74.
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