Gold eased on Wednesday as the US dollar ticked up, while expectations that the U.S. Federal Reserve may be done with its interest rate hikes capped bullion’s losses.
Spot gold was down 0.2% at $1,957.59 per ounce, as of 9:59 a.m. ET (1459 GMT). U.S. gold futures fell 0.2% to $1,961.10 .
Denting bullion’s appeal, the dollar index (.DXY) was up 0.4%, while benchmark 10-year U.S. Treasury yields rebounded after a revision of retail sales data showed strong gains in September.
Bullion gained over 1% in the previous session after data showed that U.S. consumer prices were unchanged in October. U.S. producer prices fell by the most in 3-1/2 years in October, the latest indication of subsiding inflation pressures.
“The results from CPI and PPI are positive and it continues to support gold prices with the expectation that inflation will continue to pull back adding to the expectation that the Fed is done raising interest rates,” said David Meger, director of metals trading at High Ridge Futures.
The market is pricing in a 100% chance that the U.S. central bank will leave rates unchanged in December, according to the CME FedWatch tool.
While gold is considered an inflation hedge, rising interest rates dull non-yielding bullion’s appeal.
“With yields backing up gold is lower after the initial spike up. I think the outlook will remain positive for (gold) assets but the moves will be more measured,” said Tai Wong, a New York-based independent metals trader.
Investors also looked at data that showed that U.S. retail sales fell in October, though by less than expected, after months of strong gains, pointing to slowing demand that could further strengthen expectations that the Fed is done hiking interest rates.
Spot silver rose 0.6% to 23.23 per ounce.
Platinum gained 1.3% to $896.36 and palladium fell 1.1% to $1,005.93.
