Spot Gold has extended a pullback from an all-time high of $4,381.21/oz. ahead of the key US CPI inflation report tomorrow, which may provide further clues over the Federal Reserve’s monetary easing path.
“We’ve seen a correction that is normal after the recent rally in gold and there’s still some downside pressure. We expect prices to consolidate thereafter and continue its uptrend,” GoldSilver Central MD Brian Lan was quoted as saying by Reuters.
“At this moment, in the longer term we are still bullish on gold, but in the short term investors have got to be cautious because the volatility is big.”
Annual headline consumer inflation in the US probably picked up to 3.1% in September from 2.9% in August, according to market consensus.
And, annual core CPI inflation probably steadied at 3.1% in September.
Markets are now pricing in about a 97% chance of a 25 basis point Fed rate cut in October and a 96% chance of another 25 bps cut in December.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Meanwhile, signs of easing US-China trade tensions have reduced the safe-haven allure of the precious metal.
US President Donald Trump has said he expects to strike a fair trade deal with Chinese President Xi Jinping at an upcoming meeting in South Korea. Trump also said he would raise concerns about China’s purchases of Russian oil.
Spot Gold was up 0.45% on the day to trade at $4,118.03 per troy ounce.
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