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Gold drops ahead of U.S. inflation data


Spot gold dropped nearly 0.8% to $2,342.80 per ounce, and U.S. gold futures settled around 0.6% lower to $2341.20

Gold prices dropped on Wednesday as a stronger dollar, higher bond yields and hawkish comments from a Fed official weighed on market sentiment as it braced for the release of U.S. inflation data.

Spot gold dropped nearly 0.8 per cent to $2,342.80 per ounce by 1748 GMT. U.S. gold futures settled around 0.6 per cent lower to $2341.20.

We got a small recovery going in the dollar index. Also, the Fed speakers have recently been quite hawkish. The treasury yields are continuing to increase. So just a lot of these headwinds weighing on the market, according to Phillip Streible, chief market strategist at Blue Line Futures.

The dollar added 0.4 per cent against its rivals, making gold more expensive for holders of other currencies, while the benchmark U.S. 10-year Treasury yields jumped to a near one-month high.

Minneapolis Fed Bank President Neel Kashkari said on Tuesday the U.S. central bank should wait for significant progress on inflation before reducing interest rates.

Traders are looking out for the U.S. core personal consumption expenditures price index report — the Federal Reserve’s preferred measure of inflation — due on Friday to get more cues on the timing and scale of rate cuts.

U.S. consumer confidence unexpectedly improved in May after deteriorating for three successive months amid optimism about the labour market, a survey showed on Tuesday.

Higher-than-expected personal consumption expenditures data, which raises the prospects of higher-for-longer US rates, may force spot gold to retest the key $2,300 level for support, according to Han Tan, chief market analyst at Exinity Group.

Silver rose around 0.2 per cent to $32.16 per ounce after touching an 11-year peak last week.

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