Gold subdued as US dollar, yields firm; traders await inflation data

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By Sherin Elizabeth Varghese

(Reuters) – Gold prices edged lower on Wednesday as the U.S. dollar and Treasury yields held firm ahead of key inflation data, which could offer more clarity on the Federal Reserve’s interest rate trajectory.

Spot gold eased 0.2% to $2,356.92 per ounce as of 0334 GMT. Prices had hit an all-time high of $2,449.89 on May 20.

U.S. gold futures rose 0.1% to $2,357.80.

The dollar firmed 0.1%, making gold less attractive for other currency holders, while benchmark U.S. 10-year bond yields rose to multi-week peaks. [USD/][US/]

“Investors will try to book profit and prices are trading near $2,350. So, prices have not corrected but it’s a kind of a healthy consolidation after a very sharp rally last Monday,” said ANZ commodity strategist Soni Kumari.

“Investors will try to position themselves in gold because overall long-term fundamentals are looking pretty strong for gold at the moment.”

The U.S. core personal consumption expenditures (PCE) data, the Fed’s preferred measure for inflation, is due on Friday.

“A softer U.S. core PCE release would make the job easier for gold to reclaim the $2,400 level, given the possible rate-cut timing implications,” said Tim Waterer, chief market analyst at KCM Trade in a note.

Traders currently pricing in about a 57% chance of a rate cut by November, according to the CME FedWatch Tool.

While gold is used as a hedge against inflation, rate hikes raise the opportunity cost of holding non-yielding bullion.

BHP was struggling to find common ground with Anglo American in talks over its takeover offer, with no new concessions as a deadline nears for the world’s biggest miner to submit a binding offer, five sources said.

Spot silver fell 0.4% to $31.99, platinum was down 0.7% to $1,056.06 and palladium gained 0.6% to $978.47.

The International Monetary Fund upgraded China’s GDP growth forecasts for 2024 and 2025 after a “strong” first quarter. China is a key consumer of bullion and other industrial metals.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Eileen Soreng and Savio D’Souza)



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