Gold slips as oil rally keeps inflation, rate outlook on investors' radar
Spot gold slips 0.6% to US$4,028.43 per ounce as at 0443 GMT
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[BENGALURU] Gold prices fell on Wednesday (Jul 15) after climbing more than 2 per cent in the previous session, as rising oil prices fuelled inflation concerns and uncertainty over the US interest rate outlook, weighing on non-yielding bullion.
Spot gold was down 0.6 per cent at US$4,028.43 per ounce, as at 0443 GMT. US gold futures for August delivery eased 0.8 per cent to US$4,035.50.
Gold jumped more than 2 per cent to as much as US$4,100.49 per ounce on Tuesday, rebounding from a two-week low, after data showed US consumer inflation slowed more than expected in June as energy prices retreated.
Oil prices extended gains to a third consecutive session as US President Donald Trump reimposed a naval blockade of all Iranian ports and threatened to hit power plants and bridges next week unless Teheran resumes negotiations, in the latest US escalation of the conflict.
“I reckon that the market is now looking past the consumer price index data, which is kind of a lagging indication... Trump continues to maintain the blockade of ships that (are) flowing out of the Strait of Hormuz, causing oil prices to rise and gold to come under pressure,” said Kelvin Wong, a senior market analyst at Oanda.
Elevated crude oil prices can stoke concerns around inflation and higher-for-longer interest rates, and while gold is traditionally seen as an inflation hedge, it does lose its appeal as a non-yielding asset in a high-interest-rate environment.
Top Federal Reserve officials welcomed cool inflation figures for June, but said they would need more of such readings to feel confident that price pressures are truly easing.
The producer price index, due later in the day, is expected to offer further insight on inflation.
Traders now see about a 58 per cent chance of a rate increase at the Fed’s September meeting, versus 76 per cent before the report, and are still pricing an about 80 per cent chance of a December hike, CME FedWatch Tool’s data showed.
Elsewhere, spot silver lost 0.5 per cent to US$58.35 per ounce. Platinum eased 0.1 per cent to US$1,629.89 and palladium fell 0.2 per cent to US$1,302.10. REUTERS
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