Gold prices fell during Wednesday's Asian trade as traders adopted a cautious stance ahead of the U.S. Consumer Price Index (CPI) release.
By 4:15 pm AEDT (5:15 am GMT) spot gold eased just $2.22 or 0.1% to US$2,675.24.
Earlier in the session, the U.S. Producer Price Index (PPI) data came in below expectations, showing an annual increase of 3.3% in December compared to the forecasted 3.4%. Core PPI inflation was also lower than expectations at 3.5% versus 3.8% expected.
Monthly PPI figures also fell short, suggesting moderating price pressures. Despite the softer data, markets remain confident in the Federal Reserve’s decision to pause rate cuts at its upcoming policy meeting.
According to the CME FedWatch Tool, traders have reduced their expectations to just one rate cut in 2025, down from two projected last December. This adjustment comes amid speculation that President-elect Donald Trump’s incoming administration may pursue protectionist policies likely to stoke inflation.
Economists forecast that headline U.S. CPI will increase by 2.9% year-on-year in December, up from 2.7% in November.
Core CPI inflation is anticipated to hold steady at 3.3% annually. On a monthly basis, CPI inflation is projected to remain at 0.3%, while the core figure may slightly ease to 0.2%.
