Gold prices are seen still defending their area around $4,700 even though the US CPI inflation report for April jumped higher than widely expected. For now, investors will take more cues from the US Producer Price Index (PPI) report to be released at 8.30pm tonight (Wednesday).
At 9.15am, gold prices were trading at $4,710, down 0.13% since it opened early Wednesday in Asian trading.
US inflation data released by the Bureau of Labor Statistics on Tuesday showed consumer price pressures rose again in April, reinforcing expectations that the Federal Reserve (Fed) will maintain tight monetary policy for longer.
The US Consumer Price Index (CPI) rose to 3.8% year-on-year (YoY) in April from 3.3% in March, in line with Intraday expectations and the highest level since May 2023. The increase reflects persistent inflation despite the Fed's aggressive interest rate hikes.
On a monthly basis, the headline CPI rose 0.6% from 0.9% in the previous month, in line with analysts' forecasts. Meanwhile, the core CPI, which excludes food and energy prices, also rose 0.4% month-on-month and 2.8% year-on-year.
Following the warmer-than-expected inflation report, traders are now raising the possibility that the Fed will raise interest rates again by the end of the year to around 30%, according to CME FedWatch data.
A high-interest rate environment typically weighs on gold as the precious metal does not offer investors a yield.
In addition to economic data, market attention is also focused on the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing on Thursday and Friday.
The visit is Trump's first to China since 2017, with the main focus expected to be on trade issues between the world's two largest economic powers.
