Gold slips as investors eye US inflation data

Gold prices slipped on Wednesday, though were trading above a more than two-week low hit in the previous session as investors await US inflation data that could shape expectations about the Federal Reserve’s rate outlook.

Spot gold dropped 0.2% to $1,908.70 per ounce by 3.08am GMT, having touched their lowest level since August 25 at $1,906.50 on Tuesday. US gold futures slid 0.2% to $1,931.10.

“Any upside surprises in the US inflation data could have gold again being pressured below the $1,900 level,” KCM Trade chief market analyst Tim Waterer said in a note.

With energy prices on the rise, expectations are for the headline inflation figures to come in stronger.

“On the flip side, if the energy price impact is not as great as feared in the data, we could see a pullback in yields and a path opened higher for gold,” Waterer added.

The US consumer price index (CPI) data due at 12.30am GMT could offer some insights on what to expect from the CPIin terms of rate hikes.

While the Fed is expected leave interest rates unchanged at its September 19-20 policy meeting, the US central bank will probably wait until the April-June period of 2024 or later before cutting it, according to economists in a Reuters poll.

The European Central Bank (ECB) also expects inflation to remain above 3% next year, bolstering the case for a tenth consecutive rate hike on Thursday.

Bullion is highly sensitive to rising interest rates, as they increase the opportunity cost of holding non-yielding bullion.

Spot gold may retest a support at $1,905 per ounce, with a good chance of breaking below this level and falling towards $1,898, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver shed 1% to $22.88 per ounce, platinum fell 0.8% to $903.09 and palladium dropped 0.9% to $1,229.71.