Gold prices steadied on Wednesday after initially falling following the release of US inflation data that showed a slight acceleration in prices. However, traders are still expecting the Federal Reserve to keep interest rates unchanged at its upcoming meeting, which is helping to support gold prices.
The Labor Department reported that the US Consumer Price Index (CPI) rose 0.6% in August, up from 0.5% in July. The core CPI, which excludes food and energy prices, also rose 0.3% in August, matching the July increase.
While the inflation data was slightly higher than expected, it is still below the Fed’s target of 2%. This is leading traders to believe that the Fed will not need to raise interest rates any further in the near future.
Gold is often seen as a safe haven asset that investors buy when they are worried about inflation or economic uncertainty. However, higher interest rates can make gold less attractive to investors because they can earn a higher return on other assets, such as bonds.
The next major event for gold prices will be the release of US retail sales data on Friday. If retail sales come in strong, it could boost expectations for economic growth and lead to higher interest rates, which could weigh on gold prices.
In other precious metals news, silver prices fell 0.6% to $22.98 per ounce. Platinum prices fell 1.2% to $899.71 per ounce, and palladium prices dipped 0.5% to $1,234.51 per ounce.