By Arundhati Sarkar
(Reuters) – Gold prices extended losses to a second session on Thursday as the dollar advanced, while markets assessed U.S. inflation data to gauge the Federal Reserve’s next policy move and awaited England’s interest rate decision.
Spot gold fell 0.4% to $2,022.19 per ounce by 0919 GMT, while U.S. gold futures shed 0.4% to $2,029.60.
The annual increase in U.S. consumer prices slowed to below 5% in April for the first time in two years. Although, month-over-month CPI in April rose 0.4% after gaining 0.1% in March.
The U.S. inflation data is still “way above the comfort zone of the Fed,” suggesting the central bank may not change its rate hike course soon and that has hit gold, said UBS analyst Giovanni Staunovo.
“Near-term debt ceiling talks and U.S. macro data will influence the gold price. Longer term, it could still go higher driven by a weaker dollar and lower real rates,” Staunovo added.
The dollar rose on Thursday as the Chinese yuan dipped to a two-month low after more evidence of weakness in China’s post-COVID recovery clouded the outlook for the global economy.
Top bullion consumer China’s consumer prices rose at the slowest pace in more than two years in April, while factory gate deflation deepened.
Although gold and the dollar are rival safe-haven assets, a stronger dollar makes gold more expensive for overseas buyers.
Separately, Carsten Menke, head of Next Generation Research at Julius Baer, said barring a broader-based and longer-lasting recession, more downside than upside for gold could be seen.
“Sharp short-term swings, such as that experienced after yesterday’s U.S. inflation report, seem to have become more common as of late in the gold and silver markets, pointing to increasing nervousness,” he added.
Looking ahead, the Bank of England releases its policy decision at 1100 GMT.
Spot silver fell 2.1% to $24.90 per ounce, platinum dropped 1.7% to $1,095.37, and palladium lost nearly 2% to $1,575.81.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Janane Venkatraman)
Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.