Gold prices were unchanged on Wednesday as caution prevailed ahead of US inflation data, which could influence the pace of Federal Reserve interest rate hikes.
Having hit its highest since July 5 at $1,800.29 on Tuesday, spot gold was trading flat at $1,793.78 per ounce by 1032 GMT. US gold futures were down 0.1% at $1,809.90.
Attributing the slight pressure on prices earlier in the session to profit-taking, if the numbers confirm that inflation is going to ease, that could reduce the maximum potential for US interest rate hikes, and eventually support the Prayed.
At the September meeting, gold trading is pricing in a 75 basis point rate hike and any deviation from that figure would weigh on prices.
Economists expect annual US inflation to have slowed to 8.7% last month, down from 9.1% in June. Core inflation is estimated at 0.5% month-on-month. The data will be published at 1230 GMT.
Today’s inflation figure could set the tone for the markets for the rest of the month.
While gold is seen as a hedge against inflation, recession risks and political uncertainties, rising interest rates in the United States are clouding the appeal of non-interest bearing bullion.
A lower-than-expected figure could be a major tailwind for markets, while anything around or above June’s reading could trigger a big risk reversal (…) as the debate it shifts to 75 or 100 basis points, leaving 50 in the rearview mirror.
Since March in an attempt to rein in high inflation, the Fed has raised interest rates by 225 basis points.
Among other precious metals, silver was down 0.2% at $20.46 an ounce, platinum was down 0.1% at $932.55 and palladium was down 0.3% at $2,208.09.
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