BENGALURU- Gold prices edged lower on Wednesday as caution prevailed ahead of the US consumer price inflation report that could provide more clarity on the Federal Reserve’s interest rate trajectory.
Spot gold eased 0.1 percent to $2,672.76 per ounce. US gold futures gained 0.3 percent to $2,689.70.
“If the CPI data comes higher, that might send gold lower because that kind of solidifies the view that the Fed more likely will be normalizing last year’s dovish policy in 2025,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
The data, due at 1330 GMT, will be closely watched by market participants after last week’s blowout jobs report underlined the strength of the US economy and led traders to heavily pare back bets of further Fed easing.
A Reuters poll forecast an annual rise of 2.9 percent versus 2.7 percent in November 2024 and a monthly increase of 0.3 percent.
Gold extended gains on Tuesday after data showed that the producer price index rose on an annual basis in December, slightly raising hopes that the Fed would continue rate cuts this year.