Gold heads for monthly loss as investors await US inflation data
Gold prices steadied in early trade on Wednesday but remained on course for a monthly loss, as expectations of higher interest rates weighed on sentiment and investors waited for US inflation data that could shape the Federal Reserve's next policy move. Spot gold was little changed at $4,180.30 an ounce at 0435 GMT, having lost 6% so far this month. US gold futures gained 0.8% to $4,212.70.
The dollar was also headed for a monthly gain, which makes greenback-denominated metals more expensive for holders of other currencies. The US personal consumption expenditures price index is due at 1230 GMT. Tony Sage, chief executive of Critical Metals, said the release would be an important test for gold as it could influence expectations for US monetary policy and the direction of Treasury yields and the dollar. A softer reading would likely support gold and open the way for a return to the $4,200-4,300 range, he said, while a hotter number could push yields and the dollar higher, putting renewed pressure on gold and testing the $4,100 level.
Higher interest rates typically reduce gold's appeal because the metal does not offer a yield. According to CME's FedWatch Tool, traders see a 47% chance of a Fed rate increase in October and a 92% chance of a hike in December. The US central bank raised rates by 25 basis points this month.
New York Fed President John Williams said Fed policymakers probably only need to deliver one more hike this year to get inflation back on track to the central bank's 2% goal. On the geopolitical front, Qatar said it hoped shuttle diplomacy between Tehran and Washington would yield a breakthrough, even after US President Donald Trump denied reports that he would ease sanctions and release frozen Iranian funds in return for nuclear concessions.
Among other precious metals, spot silver fell 0.6% to $61.07, platinum slipped 0.2% to $1,703.19 and palladium lost 0.2% to $1,220.61. All three were poised for monthly declines.
