Gold prices fell back on Wednesday, approaching recent multi-month lows and giving back much of Tuesday’s advance.
While weaker-than-expected US inflation data provided some relief yesterday, a stabilising dollar and bond yields, and ongoing interest rate hike expectations could leave the metal under pressure.
US yields recovered some of Tuesday’s losses and could continue to weigh on non-yielding assets like gold if they remain at elevated levels.
Looking ahead, markets will continue to monitor upcoming economic data, including the PPI, for their impact on monetary policy and yields. At the same time, developments in the Middle East will remain in focus.
A prolonged escalation could push oil prices higher again and place further downward pressure on gold if inflation concerns and monetary policy tightening expectations strengthen. However, any signs of de-escalation could soften the interest rate outlook and boost the precious metal.
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