By Harshit Verma
(Reuters) -Gold prices steadied on Wednesday, after posting their biggest drop in a month in the previous session, as sticky U.S. inflation raised concerns that the Federal Reserve might delay going for an interest rate cut beyond June.
Spot gold edged 0.1% up to $2,158.70 per ounce, as of 0759 GMT. U.S. gold futures fell 0.1% to $2,164.80.
Gold’s latest price drop comes as everything falls back to the inflation data, that feeds through into U.S. Fed’s decision making, said Michael Langford, chief investment officer at Scorpion Minerals Ltd.
Langford expects a healthy correction of up to about 10% in gold prices from here.
Bullion fell 1.1% on Tuesday, after data showed U.S. consumer prices increased solidly in February, above forecasts and suggesting some stickiness in inflation. This was gold’s worst single-day decline since Feb. 13, when data showed consumer prices also increased more than expected in January.
Traders slightly lowered their hopes for a June rate cut, pricing in a 67% chance, according to LSEG’s interest rate probability app, down from 72% on Tuesday before the data.
There is an excess amount of money in the system and there had been a flow of funds into commodities, keeping base metals as well as gold supported so far, Langford said.
The U.S. inflation reading pushed U.S. Treasury yields and the dollar higher. The 10-year Treasury yield got an extra lift after weak demand at an auction of $39 billion of the benchmark note.
Meanwhile, markets also kept a tab on attacks on Russia’s energy infrastructure from Ukraine, that prompted President Vladimir Putin to warn the West that it is ready for a nuclear war.
Spot platinum rose 0.3% to $926.59 per ounce, palladium gained 0.1% to $1,042.25 and silver was flat at $24.17.
(Reporting by Harshit Verma in Bengaluru; Editing by Rashmi Aich and Mrigank Dhaniwala)
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