Gold prices finished Wednesday with a loss, at a fresh three-week low, as the latest reading on U.S. inflation revealed the largest monthly climb in more than a year.
Price action
-
Gold futures for December delivery
GCZ23,
+0.01%
declined by $2.60, or 0.1%, to settle at $1,932.50 per ounce after losing 0.6% on Tuesday. The most-active contract marked its lowest finish since Aug. 22, according to Dow Jones Market Data. -
Silver futures for December
SIZ23,
-0.21%
lost 22 cents, or 0.9%, to $23.18 per ounce. -
Platinum for October delivery
PLV23,
+0.11%
fell by $7.60, or 0.8%, to $905.20 per ounce, while palladium for December delivery
PAZ23,
-0.58%
added $15.50, or 1.2%, to $1,260.80 per ounce. -
Copper for December delivery
HGZ23,
ended nearly flat at $3.79 per pound.
Market drivers
U.S. consumer prices rose by 0.6% in August, which marked the largest monthly increase in 14 months. If energy and food prices are set aside, so-called core inflation rose a smaller 0.3% in August, the consumer-price index showed.
The yearly rate of inflation moved up to 3.7% last month from 3.2% in July. Economists polled by the Wall Street Journal expected consumer prices to rise 3.6% year over year.
The data offered little clarity about the Federal Reserve’s policy outlook, said Han Tan, chief market analyst at Exinity.
The uptick in core CPI may “keep bets of one more Fed rate hike alive, with such prospects capping gold’s potential upside in the interim,” he told MarketWatch. “As long as hopes for Fed rate cuts are kept at bay, bullion bulls should struggle to carve out meaningful gains for the precious metal.”
Read: Here’s what the gold-silver price ratio tells us about silver
Following the CPI data, the ICE U.S. Dollar Index
DXY,
a gauge of the dollar’s strength against a basket of major currencies, was down nearly 0.1% at 104.63. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was down 2.2 basis points at 4.245% in Wednesday dealings.
Expectations for a hot reading on August U.S. inflation had helped drive the dollar higher alongside Treasury yields. The double whammy weighed on gold, since higher yields increase the return investors can reap from holding bonds, making gold, which offers no yield, less attractive by comparison.
Still, in a market update, Edward Moya, senior market analyst at OANDA, said that at the very most, gold might have to deal with one more Fed interest-rate hike in November. “It is clear that the economy will steadily weaken going forward,” he said.
He added that “bad economic news is about to become good news again for gold” as Wall Street is “getting closer to putting a peak in place for the dollar.”
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