Gold prices edge down ahead of US inflation data

Shafaq News/ Gold prices edged lower on Wednesday as investors remained on the sidelines ahead of a key US inflation report later in the day that could set the tone for the Federal Reserve's September policy meeting.

Spot gold eased 0.2% to $2,460.89 per ounce by 0537 GMT. Prices had hit a record high of $2,483.60 last month.

US gold futures edged 0.3% lower to $2,500.10.

US consumer price index data for July is due at 1230 GMT and expected to show month-on-month inflation accelerated to 0.2%, with the annual core slowing a tick to 3.2%. Retail sales data is scheduled for Thursday.

Gold might drop to $2,300 if the (CPI) data doesn't align with expected rate cuts, but in the long term, bullion is likely to rise as the US economy weakens enough for the Fed to cut rates significantly, said Kyle Rodda, a financial market analyst at Capital.com.

Data on Tuesday showed that US producer prices increased less than expected in July, reinforcing market view that cooling inflation will allow the Fed to cut rates soon.

Traders see a 54% chance of a 50-basis-point rate cut in September, according to the CME FedWatch Tool.

Atlanta Fed President Raphael Bostic said he wants to see "a little more data" before he's ready to support lowering rates.

Gold, often used as a hedge against geopolitical risks, thrives when interest rates are low.

Investors are largely buying gold in anticipation of a retaliatory strike from Iran, but they unwind those positions if the strike doesn't occur, added Rodda.

Only a ceasefire deal in Gaza stemming from hoped-for talks this week would hold Iran back from direct retaliation against Israel for the assassination of Hamas leader Ismail Haniyeh on its soil, three senior Iranian officials said.

Spot silver fell 0.4% to $27.73 and platinum shed 0.5% to $931.50.

Palladium was up 0.3% at $941.00 after hitting its highest level since July 24 in the previous session.

(Reuters)