Gold slips from record levels after hot U.S. inflation data

Gold prices slipped from record-high levels on Wednesday as the U.S. dollar and Treasury yields firmed after a stronger-than-expected inflation print softened expectations of an early U.S. rate cut.

Spot gold fell 0.6% to $2,338.05 per ounce. U.S. gold futures lost 0.2% to $2,356.30.

The U.S. dollar index rose 0.5% and U.S. Treasury yields spiked after the data, making non-yielding bullion less attractive.

A Labor Department report showed the consumer price index rose 0.4% on a monthly basis in March, compared with the 0.3% increase expected by economists polled by Reuters.

Gold prices stumbled with the stronger-than-expected CPI data contributing to expectations of later and fewer cuts by the Fed, said Tai Wong, a New York-based independent metals trader. “However, let’s wait and see; as gold has been resilient in the face of strong data during this remarkable run,” Wong added.

Despite being known as an inflation hedge, bullion’s appeal tends to fade in an elevated interest rate environment. Bullion prices hit a record high of $2,365.09 on Tuesday.

HSBC said in a note that it expects to see a wide trading range of $1,975-$2,500 for gold prices in 2024.

“Escalating geopolitical risks significantly bolster gold as hot and cold conflicts, and a record number of elections this year, keep the risk thermometer high,” the note added.

The Shanghai Futures Exchange on Wednesday said it will impose trading limits on its gold contracts, following a sharp price rally.

Strong buying from Chinese households is “due to the lack of alternative options that (these) households have for investment at the moment with the property sector in crisis and the stock market in the doldrums,” said Kieran Tompkins, commodities economist at Capital Economics.

Spot silver fell 0.5% to $28.01 per ounce, after hitting a near three-year high on Tuesday. Platinum edged 1% lower to $969.05 and palladium fell 1.9% to $1,071.75.