Gold Prices Lowered after US Inflation Data

On Thursday, gold prices went down as hopes about the Federal Reserve slashing interest rates faded after the US inflation report.

Gold futures for June delivery declined by -0.38% to $2,029.30 per troy ounce on May 11’s Asian afternoon session. Likewise, spot gold was down by 0.20% to $2,030.70 per ounce.

According to analysts, there are still risks that the Fed will keep the rates high for a while. The precious metal would need more rate cuts to become sharply priced in resuming its rally.

It rose by 0.70% after data showed the US Consumer Price Index jumped by 4.90% in April from last year. However, it is still lower than the expected 5.00% increase.

Furthermore, the reading paused the momentum built for an 11th consecutive interest rate hike in June. Moreover, most futures linked to the Fed’s rate were betting on a halt.

Meanwhile, gold may face difficulties in the short term since core inflation remained unchanged from the previous month.

While the commodity is considered a barrier to combat inflation, rising interest rates affect non-yielding precious metals’ appeal.

In addition, some experts mentioned that gold could try to have another run for record highs. This is despite the economic worries and a possible US debt ceiling default.

Dubai Gold Prices Dropped in Early Trade

According to Dubai Jewelry Group, the 24K gold traded at Dh246.00 a gram. The price is weaker than last night’s Dh246.75 per gram. Also, other variants of the commodity opened lower.

Based on experts, they wonder if gold will continue to be in demand of bearish news about banks. The rallies of the bullion on the turmoil of regional credit institutions were mainly a liquidity crisis. As a result, capital may flow back gradually into dollar-denominated debt assets, providing good yields.

Additionally, investors should remember that trend towards more robust purchases of gold as a reserve is at risk of sanctions.

Meanwhile, they added that it is vital to realize that the banks’ issues are not the only driver for gold.