Gold prices edged higher on Wednesday, supported by cooler-than-expected U.S. inflation data that boosted investor expectations of a potential interest rate cut by the Federal Reserve as early as September.
As of 13:55 ET (1755 GMT), spot gold was up 0.1% at $3,324.72 per ounce, after rising as much as 1% earlier in the session. U.S. gold futures settled largely unchanged at $3,343.7.
The U.S. Consumer Price Index (CPI) showed a 0.1% increase last month, following a 0.2% rise in April. Economists had expected CPI to climb by 0.2%, with an annual increase of 2.5%. This unexpected dip in inflation raised hopes that the Federal Reserve could initiate interest rate cuts sooner than anticipated.
“The surprise low print in core CPI has lifted the entire precious metals complex higher as yields and the dollar fall,” said Tai Wong, an independent metals trader. “The hope is that this will bring a Fed cut that much sooner.”
Market participants are now pricing in a 68% chance of an interest-rate cut by the U.S. central bank in September, according to the CME FedWatch tool.
Trade Developments and Market Focus
On the trade front, U.S. President Donald Trump announced that a deal had been reached with China, with Beijing agreeing to supply magnets and rare earth minerals, while Washington would allow Chinese students to attend U.S. colleges and universities. However, the primary focus for traders is now on the upcoming U.S. Producer Price Index (PPI) data, scheduled for release on Thursday, ahead of the Federal Reserve’s June 17-18 meeting.
“The market will want to see gold and silver take out recent highs — $3,403 and $36.90, respectively — as a signal to charge higher,” Wong added. “If we don’t see a strong rally on surprisingly good data, it could signal a short-term correction.”
Platinum and Other Precious Metals
Meanwhile, platinum surged 2.9%, reaching $1,256.70 per ounce and hitting its highest level since 2021 earlier in the day. Speculative demand and interest from Exchange-Traded Funds (ETFs) have fueled platinum’s rally. However, Goldman Sachs warned in a note that a sustained breakout may be unlikely, due to price-sensitive demand from China, reduced demand from the auto sector, and an expected increase in global supply.
Spot silver eased 1.2% to $36.11 per ounce, while palladium gained 1.3%, trading at $1,074.25.
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