Gold prices were little changed above US$2,900 during Wednesday's Asian session as market participants turned focus towards upcoming United States inflation data.
As of 3 pm AEDT (4 am GMT), spot gold traded at US$2,915.70 per ounce, consolidating its 1% gain from Tuesday.
The modest recovery in the U.S. dollar and Treasury bond yields limited gold’s upward momentum. However, if the inflation figures indicate a softer-than-expected increase, the Federal Reserve may accelerate its plans for interest rate cuts, potentially boosting demand for gold, a non-yielding asset.
Conversely, a higher-than-expected CPI reading could reinforce the Fed’s cautious stance, weighing on gold prices.
Market participants are also monitoring the ongoing tariff dispute. White House officials confirmed on Tuesday (Wednesday AEDT) that a 25% tariff on imported steel and aluminium would take effect on Wednesday.
In response, Canada’s Energy Minister Jonathan Wilkinson stated that Ottawa might impose non-tariff measures, including restrictions on oil exports to the U.S., if trade tensions escalate.
Meanwhile, investors are closely watching U.S.-Russia peace negotiations regarding the Ukraine conflict, scheduled for later on Wednesday.
Ukrainian President Volodymyr Zelensky has agreed to a 30-day ceasefire proposed by the US, contingent on Russia’s acceptance.
ANZ analysts commented: “Airlines including American Air and Southwest slashed their financial forecasts citing weak consumption trends, while weak guidance and warnings from the consumer goods sector are rising.
"This saw bets on multiple rate cuts by the Fed this year increase, boosting the appeal of a non-yielding asset such as bullion.”
