Data on Tuesday showed U.S. producer price growth fell less than expected in July, suggesting inflation is slowing.
Gold prices fell on Wednesday as investors awaited a key U.S. inflation reading later in the day that could provide further information for the Federal Reserve’s September policy decision.
In the UAE, gold prices fell by AED1.5, with 24-karat gold slightly lower at AED298 and 22-karat gold at AED276, while 21-karat gold was at AED267.25 and 18-karat gold at AED229.
Globally, spot gold was down 0.08% to $2,461.93 as of 05:08 GMT, while US gold futures were down 0.26% to $2,501.35.
Inflation rises in July
Gold prices fell as investors awaited the release of U.S. Consumer Price Index data for July at 12:30 GMT, which is expected to reveal a 0.2% month-on-month increase in inflation and a decline in annual core inflation to 3.2%. The market is also awaiting U.S. retail sales data on Thursday.
Data released on Tuesday showed U.S. producer price inflation rose weaker than expected in July, reinforcing market expectations that inflation is slowing and that the Federal Reserve is likely to cut interest rates soon.
Atlanta Fed President Raphael Bostic said he wanted to see more data before backing a rate cut. Traders see a 54% chance of a 50-basis-point U.S. rate cut in September, according to the CME FedWatch tool.
Gold prices have been hovering near record highs as rising geopolitical tensions in the Middle East and expectations of a low interest rate environment have boosted demand for non-yielding assets.
Read: What is Tax Loss Recovery? A Complete Guide
Other precious metals
The drop in gold prices also led to declines in the precious metals market, with spot silver down 0.37% to $27.74, while palladium was down 0.03% to $938.33 and platinum was down 0.53% to $931.19, while copper was flat at $4.04.
For more market news, click here.