Gold prices declined on Wednesday as the U.S. dollar strengthened, pulling back from a record high reached in the previous session. Investors are now focusing on upcoming economic data later this week to gain insights into the Federal Reserve’s policy direction.
Spot gold decreased by 0.8% to $3,734.58 per ounce at 01:56 p.m. ET (1756 GMT), after achieving a record high of $3,790.82 on Tuesday.
U.S. gold futures for December delivery closed 1.2% lower at $3,768.1.
The U.S. dollar index went up about 0.6%, making gold, which is priced in dollars, more costly for investors using other currencies. Additionally, the benchmark 10-year Treasury yields edged up.
“Gold is still absorbing some of the comments from the Federal Reserve yesterday and the ongoing geopolitical tensions with Russia. It’s showing slight caution ahead of the upcoming economic data,” said Phillip Streible, chief market strategist at Blue Line Futures.
Fed Chair Jerome Powell on Tuesday provided no new insights on future interest rate directions, emphasizing the need for the central bank to balance the risks of persistent inflation against a slowing job market.
Markets are anticipating two more 25-basis-point rate cuts this year — one in October with a 94% likelihood and another in December with a 77% likelihood, according to the CME FedWatch tool.
Attention is now on Thursday’s weekly U.S. jobless claims data and Friday’s release of the U.S. Personal Consumption Expenditures index, the Fed’s preferred measure of inflation.
On the geopolitical front, Ukraine’s military announced on Wednesday it targeted two oil pumping stations overnight in Russia’s Volgograd region.
Safe-haven gold becomes more appealing during times of geopolitical and economic uncertainty. It also tends to prosper in a low-interest-rate environment as it is a non-yielding asset.
Spot silver dropped 0.4% to $43.84 per ounce. Platinum declined 0.7% to $1,468.44, and palladium fell 0.7% to $1,211.45.
