By Sherin Elizabeth Varghese
(Reuters) – Gold prices held steady on Wednesday near a record high hit in the previous session as a favourable mix of emerging inflationary risks and ongoing geopolitical tensions underpinned the safe-haven metal.
Spot gold was little changed at $2,355.29 per ounce, as of 0719 GMT, after hitting a record high of $2,365.09 on Tuesday. U.S. gold futures gained 0.5% to $2,373.50.
“Gold is diverging from its traditional key drivers … due to geopolitical tensions, central banks in emerging markets are stockpiling gold to diversify the risk, some volatility in Chinese currency and the emergence of inflation risk are also driving prices right now,” ANZ commodity strategist Soni Kumari said.
The U.S. consumer price index (CPI) report for March due at 1230 GMT is expected to show that the year-on-year CPI rose to 3.4%, while the core CPI is seen slowing to 3.7%, according to a Reuters poll. [USCPNX=ECI] [USCPNY=ECI]
“If inflation number comes on the higher side there could be some pushback again for rate-cut expectations, especially since after the strong jobs data the expectation of rate cuts has shifted from June to July,” Jigar Trivedi, a senior analyst at Reliance Securities, said.
Higher interest rates reduce the appeal of holding non-yielding gold.
Markets also await the minutes of the U.S. Federal Reserve’s March meeting due at 1800 GMT. The Fed had held interest rates steady at 5.25%-5.50% range last month, and indicated that they still expect to cut them by 75 basis points by end-2024.
Spot silver was flat at $28.15 per ounce, after hitting a near three-year high on Tuesday.
“We see that silver is going to outperform gold this year … expecting that investment demand which has been a laggard for silver prices is going to turn and you will start seeing prices gaining momentum right now,” ANZ’s Kumari added.
Platinum edged 0.2% lower to $976.67 and palladium fell 0.4% to $1,088.75.
(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Shounak Dasgupta)
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