Gold Slides as US Inflation Data Looms with Rate Hikes on the Horizon
Gold prices have remained largely steady on Wednesday but are still poised for a monthly decline due to expectations of higher US interest rates. Investors are now waiting for key US inflation data, which is set to be released at 1230 GMT on Wednesday.
The data will provide clues on the trajectory of inflation and monetary policy, which is crucial for gold markets. The US personal consumption expenditures (PCE) price index is a closely watched indicator of inflation, and any deviation from expectations could have significant implications for the Federal Reserve's next policy moves.
New York Fed President John Williams has indicated that the central bank has time to assess incoming economic data before deciding on further rate increases. He also hinted that another increase could come before the end of the year, with traders pricing in a 50% probability of a hike in October and a 92% probability of a hike in December.
The pressure on gold comes against a backdrop of weakening US consumer sentiment, with households expecting business and labour-market conditions to deteriorate over the next six months. Higher interest rates can weigh on gold because it does not generate interest income, making yield-bearing assets relatively more attractive when rates rise.