Gold under pressure from stronger dollar, Nvidia and US inflation data in focus | World news

Gold prices fell on Wednesday under pressure from a stronger dollar and uncertainty ahead of a key U.S. inflation report that could shed more light on the U.S. Federal Reserve's September policy meeting.

Spot gold was down 0.8 percent at $2,504.25 an ounce by 11:13 GMT. On Tuesday, prices rose 0.3 percent to $2,524.57, a record closing high.

The U.S. currency stabilized on Wednesday, making dollar-denominated commodities less attractive to buyers in other currencies. Recent dollar declines had pushed the currency to its lowest level in over a year.

The dollar index, which measures performance against a basket of currencies, recently rose by 0.34 percent. [FRX/]

“There are a lot of moving parts today, and things like Nvidia's results hang over the market and give clues about the direction of (interest) rates,” said one gold trader. “The Fed is rightly cautious right now, and that doesn't help people's orientation. Cash is king today.”

Markets are focused on upcoming US data on personal consumption expenditures (PCE), the Fed's preferred inflation measure, due to be released on Friday.

The price of gold has risen 21 percent so far this year and is heading for its strongest annual gain since 2020. It is supported by expectations of interest rate cuts in the US, demand for safe havens driven by geopolitical and economic uncertainty, and robust purchases by central banks.

The rally, which began in March and saw spot prices reach a record high of $2,531.60 on August 20, was initially driven by strong demand in China until high prices led to a decline in imports and the focus shifted to purchases by Western investors.

With a rate cut widely expected, physically-backed gold ETFs (Exchange Traded Funds) resumed buying after several years of capital outflows and are heading for their fourth consecutive month of inflows in August.

Gold ETFs saw modest net inflows of eight tonnes ($403 million) last week, led by North American funds, according to the World Gold Council.

Among other precious metals, the spot price of silver fell 1.8 percent to $29.42 an ounce, platinum fell 1.4 percent to $940.20 and palladium lost 1.3 percent to $958.

First published: August 28, 2024 | 6:21 p.m. IS