Gold prices were flat on Wednesday,
after falling more than 1% in the previous session, as
surprisingly stronger U.S. inflation data fueled expectations
that the Federal Reserve will continue hiking interest rates
aggressively and bolstered the dollar.
Spot gold was flat at $1,701.70 per ounce as of 0331
GMT. Prices saw their biggest one-day percentage decline since
July 14 on Tuesday.
U.S. gold futures were down 0.4% at $1,710.40.
The stronger-than-anticipated numbers have “cemented the
likelihood for a jumbo-sized rate hike at the (Fed) meeting that
we’re going to see next week,” said DailyFX currency strategist
A hawkish FOMC could prompt gold to significantly shift
lower, even below the $1,600 figure, Spivak said.
U.S. Labor Department data showed on Tuesday the headline
Consumer Price Index edged up 0.1% last month versus
expectations for a 0.1% decline, while core inflation surged
The data has stoked expectations that the Fed could raise
U.S. borrowing costs faster and further than previously
Nomura’s economists said they now believe a 100 basis-point
rate hike is the most likely outcome at the Sept. 20-21 meet.
The dollar index , which measures the currency against
six major peers, was steady after recording its biggest one-day
percentage gain since March 2020 overnight.
Benchmark U.S. Treasury yields hovered close to
a near three-month peak touched on Tuesday.
Even though gold is seen as a hedge against inflation,
higher interest rates increase the opportunity cost of holding
the bullion while boosts the dollar, in which the precious metal
Spot silver dipped 0.2% to $19.28 per ounce and
platinum rose 0.5% higher to $880.67.
Palladium fell 0.8% to $2,088.36, having fallen 7.1%
in the previous session its biggest one-day percentage drop
since June 13.
(Reporting by Eileen Soreng in Bengaluru; editing by