Gold prices eased on Wednesday after rising in the previous two sessions, as investors positioned for the April U.S. inflation data, which could have a bearing on the Federal Reserve’s interest rate policy.
Spot gold was down 0.3% to $2,028.06 per ounce by 0850 GMT, while U.S. gold futures shed 0.4% to $2,034.40.
The U.S. consumer price index (CPI) data is due at 1230 GMT. Economists polled by Reuters expect a 5.5% year-on-year increase in core consumer prices for April.
“For the time being, gold in dollar terms remains well supported until $1,970, whilst resistance may arise in the area between $2,066 and $2,076,” said senior market analyst at Capital.com, Daniela Hathorn.
“With U.S. CPI out later today, we may see a rebound in stocks if the data shows inflation continues to drop – but we are likely to continue seeing buying support for gold as concerns about growth are keeping the path of least resistance tilted to the upside,” she added.
Fed Chair Jerome Powell has said it was now an open question whether further rate increases will be warranted in an economy still facing high inflation, but also showing signs of a slowdown.
While gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion’s appeal.
However, analysts have said gold could attempt another run to record highs, given persistent economic concerns including U.S. debt ceiling jitters.
President Joe Biden and top lawmakers agreed on Tuesday to further talks aimed at breaking a deadlock over raising the $31.4 trillion U.S. debt limit.
If U.S. inflation remains moderately controlled, it may lead to a pause in rate hikes, weakening the dollar and supporting gold, said Hareesh V, the research head at Geojit Financial Services.
Spot silver fell 0.3% to $25.55 per ounce, platinum lost 0.4% to $1,100.21, while palladium rose 0.1% to $1,572.06.
