(Bloomberg) — Gold erased an earlier gain after US data showed inflation eased in July, keeping the Federal Reserve on track to lower interest rates next month.
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Bullion slipped as much as 0.9% on Wednesday, though it’s still trading near the record high reached last month. While the core consumer price index — which excludes food energy costs — rose on an annual basis, it was still the slowest pace since early 2021, the US figures showed.
“Fed cuts were already priced into the markets – it’s just a question now of by how much,” said Rhona O’Connell, an analyst at StoneX. “There is probably a touch of profit taking going on here, with short-term moves belying the longer-term fundamentals.”
Gold is up 19% this year, bolstered by mounting optimism on monetary easing and purchases by central banks. Lower interest rates are typically bullish for gold, which doesn’t pay any interest. Bullion’s appeal as a haven asset has also been boosted by tensions in the Middle East and Russia’s war with Ukraine.
Spot gold declined to $2,443.29 an ounce by 4:52 p.m. in London. The Bloomberg Dollar Spot Index edged lower. Silver, platinum and palladium dropped.
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