Spot Gold extended its slide on Wednesday after the latest US inflation figures dampened hopes of Federal Reserve interest rate cuts.
Uncertainty in the Middle East also weighed on the metal. The backdrop in the region remains unsettled following recent remarks by US President Donald Trump, who stated that Iran was “under control”, but warned that the situation could result in either a new agreement or complete “decimation.”
In a reply, Iranian Deputy Foreign Minister Kazem Gharibabadi insisted that any acceptable peace framework must include reparations, recognition of Iranian sovereignty over the Strait of Hormuz and the full removal of US sanctions.
On the data front, US Consumer Price Index for April rose 0.6% month-over-month, which drove annual headline inflation to 3.8% – the highest rate since May 2023.
And, annual core inflation rate, which excludes food and energy, accelerated to 2.8% in April.
Traders have largely priced out Fed interest rate cuts for 2026, while the probability of a hike by December stood at 30%.
“Inflation data out of the U.S. has really watered down hopes, if not extinguished them, that there will be rate cuts from the Fed, and now the markets are kind of pricing in that the next move could be a hike as soon as the end of the year. So it kind of puts some downward pressure on gold,” Kyle Rodda, senior financial market analyst at Capital.com, was quoted as saying by Reuters.
Market players now focused on the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing later this week.
Spot Gold was last down 0.24% on the day to trade at $4,704.13 per troy ounce.
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