Gold Prices Steady Ahead of Key Inflation Data Release

Gold prices were steady on Wednesday but still headed for a monthly decline due to expectations of higher interest rates, which weigh on sentiment. Investors are bracing themselves for US inflation data that will provide clues on the Federal Reserve's next policy move.

The US Personal Consumption Expenditures (PCE) Price Index is set to be released at 12:30 pm GMT, and its impact on gold expectations could be significant. A softer reading would likely support gold and potentially send prices back up to $4,200 to $4,300 range, while a hotter number could push yields and the US dollar higher, putting renewed pressure on gold.

According to Tony Sage, CEO of Critical Metals, 'A softer reading would likely support gold and open the way for a return to the US$4,200 to 4,300 range, while a hotter number could push yields and the US dollar higher, putting renewed pressure on gold and testing the US$4,100 level.'

The US central bank raised interest rates by 25 basis points in September, and traders see a 47% chance of a Fed rate increase in October and a 92% chance of a hike in December. Higher interest rates typically reduce gold's appeal because the metal does not offer a yield.