Latest News

Gold drops over 1% after in-line US inflation data

Gold prices continued to fall on Wednesday after U.S. data on inflation came in largely in line with expectations. This increased bets that the Federal Reserve will raise interest rates next month. Investors also awaited comments from Chairman Kevin Warsh.

Gold prices fell by 1.3%, to $4.594.84 an ounce at 11:31 am EDT (1531 GMT), following a rise to their highest level since May 14, on Tuesday. U.S. Gold Futures fell 0.9% to $4650.90.

Dollars rose by 0.3% making the greenback more expensive to holders of other currencies.

Peter Grant, senior metals analyst at Zaner Metals, said that the gold price's action before today's data had been a profit-taking move. The PCE data came in in line with expectations. We're now consolidating in yesterday's range.

Bureau of Economic Analysis of the Commerce Department reported on Wednesday that the Personal Consumption Expenditures price index,?which is used by the Fed to determine its inflation target?, had increased 3.7% over the past 12 months. The economists polled had predicted a reading between 3.6% and 3.7%.

According to the CME FedWatch tool, traders now expect a 38% probability of a rate increase next month. This is up from 36% prior to the release of the data. They also price in a 62% likelihood that the Fed will keep rates the same.

In an environment with high interest rates, gold that does not yield is often less appealing.

"I believe the gold uptrend is starting to reassert its self." Grant stated that he sees a 'potential to go back above $5,000 in this year.' He added that gold could reach new highs as early as the second quarter of 2027.

Iran's Revolutionary Guards announced on Wednesday that, on the geopolitical side, Iran and Oman had reached an agreement regarding their share of Strait of Hormuz revenues and their shares of revenue. However, the vital waterway would not reopen if the U.S. did not accept the conditions.

Silver spot fell by 1.1%, to $67.91 an ounce. Platinum dropped 1.2%, to $1.837.78. Palladium declined 0.1%, to $1.325.10. (Reporting from Bengaluru by Pablo Sinha. (Editing by Jonathan Ananda, Mark Potter and Jonathan Ananda)

(source: Reuters)