Gold prices edge lower, threaten first back-to-back decline in May as traders await inflation update
Gold prices on Wednesday were edging toward a second straight drop, the first back-to-back retreat for bullion so far this month, as investors watched for a reading of U.S. inflation that could prove a near-term catalyst across financial markets.
Bullion has been mostly on the rise trading near the highest level since February as a gauge of the U.S. dollar has been hanging around its weakest level since February.
Some commodities experts say that gold, which is often viewed as a hedge against rising inflation, should benefit from a strong reading of inflation due at 8:30 a.m. Eastern, which could show the strongest headline climb in inflation in about a decade.
Average readings from economists surveyed by Econoday are for a 0.2% rise in the headline figure after a 0.6% jump in March. Core CPI, which strips out volatile food and energy prices, is seen up 0.3%, matching a March rise.
Annually, the CPI is expected to rise 3.6%, the largest rise since 2011, while the core rate is seen up 2.3% for the year, excluding food and energy prices. The consumer price index rose 0.6% in March from the previous month and 2.6% from a year ago, according to the U.S. Labor Department.
“Gold, on the other hand, should benefit from the rising inflation expectations as long as the US yields remain soft — as long as the Federal Reserve manages to contain the inflation fears and the Fed hawks’ impatience to step in,” wrote Ipek Ozkardeskaya, senior analyst at Swissquote, in a Wednesday research note.
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