Gold prices eased from an eight-month peak on Wednesday as investors positioned themselves ahead of U.S. inflation data that could throw some light on Federal Reserve’s policy path with expectations mounting that slower rate hikes were on the horizon.
Spot gold fell 0.3% to $1,872.64 per ounce by 10:17 a.m. ET (1517 GMT). U.S. gold futures rose 0.1% to $1,877.30.
Prices were trending lower on some “profit taking from the shorter term futures traders ahead of the CPI report tomorrow,” said Jim Wyckoff, senior analyst at Kitco Metals, adding that the market could continue to trade sideways ahead of the data.
The U.S. consumer price report will be closely watched for cues on Fed’s strategy after the U.S. central bank slowed the pace of its rate hikes to 50 basis points in December after four back-to-back 75 bps hikes.
Traders see a 77% chance the Fed will raise the benchmark rate by 25 bps to 4.50%-4.75% in February, and see rates peaking at 4.92% by June.
“This could be a big report if we get another good reading that shows inflation falling faster than anticipated,” said Craig Erlam, a senior market analyst at OANDA, adding it could be enough to change the hawkish tone the markets are continuing to hear from the Fed.
While worries remain about over the scale and impact of the COVID outbreak in top gold-consumer China, “over the longer term, China is expected to bounce back strongly which could stimulate additional demand,” Erlam said.
Spot silver fell 1.4% to $23.27 per ounce, on track to fall for three sessions in a row.
Platinum rose around 0.8% to $1,090.00 while palladium fell 0.6% to $1,770.00.
Despite palladium lagging, platinum, gold and silver have been seeing bullish attitudes based upon China’s reopening, Wyckoff said.
