Gold prices remain near a multi-week low as traders await the release of the US CPI report on Thursday. Elevated US bond yields are posing a challenge for gold, while subdued USD price action is offering some support. Additionally, the generally positive tone in the equity markets is contributing to capping the safe-haven gold price.
The upcoming US CPI report will play a crucial role in determining the future policy decisions of the Fed and subsequently the trajectory of gold prices. Recent US macro data indicating above-target inflation and hawkish remarks from Fed officials have led to reduced expectations for aggressive policy easing. This has resulted in elevated US Treasury bond yields, creating a headwind for gold.
The uncertainty surrounding the timing of interest rate cuts by the Fed is keeping USD bulls on the defensive, which is providing some support to gold. However, the precious metal remains within striking distance of a three-week low touched earlier in the week.
With no significant economic data expected from the US on Wednesday, the movement of the USD will largely depend on US bond yields and the broader risk sentiment. Despite short-term opportunities in the market, the lack of buyer interest in gold suggests the possibility of an extension of the current downtrend.
Looking ahead, traders will closely monitor technical levels and market sentiment for potential cues on the direction of gold prices. The upcoming US CPI report will be the key event to watch and could have a significant impact on gold’s near-term outlook.
