Gold Prices Dip as Markets Anticipate U.S. Inflation Data

Mumbai, 15 May (Commoditiescontrol): Gold prices saw a slight decline on Wednesday, with traders keenly awaiting the release of U.S. inflation data, which is expected to provide further clues on the future direction of Federal Reserve interest rate policies.

Spot gold dropped by 0.1% to $2,355.24 per ounce, following a 1% increase on Tuesday. Meanwhile, U.S. gold futures remained steady, holding at $2,361.10 per ounce. Attention is centered on the forthcoming U.S. Consumer Price Index (CPI) data, scheduled for release at 1230 GMT, which could heavily influence market movements.

This anticipation comes in the wake of a report showing U.S. producer prices rising more than expected in April, driven by significant hikes in the costs of services and goods, suggesting persistent inflationary pressures at the start of the second quarter.

However, Federal Reserve Chair Jerome Powell provided a somewhat reassuring outlook, indicating his expectation for U.S. inflation to continue its decline through 2024, similar to last year's trend. Powell also mentioned that further rate increases might be unnecessary.

Adding to the cautious optimism, Federal Reserve Bank of Cleveland President Loretta Mester stated it was appropriate for the Fed to maintain steady rates while monitoring for signs of easing price pressures. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making them more attractive to investors.

In other market news, shares of BHP Group listed in Australia climbed 2.3% after Anglo American, the target of BHP's $43 billion takeover bid, announced a breakup plan in response.

As investors await key economic indicators, the mood in Asian markets appears upbeat, bolstered by lower U.S. bond yields and a weaker dollar, raising hopes for a potential Fed rate cut as early as September.

In precious metals, spot silver dropped by 0.2% to $28.52 per ounce, while platinum and palladium saw gains, rising 1.6% to $1,047.73 and 0.9% to $986.15 per ounce, respectively.

(By Commoditiescontrol Bureau: 09820130172)