Gold Prices Rise as Investors Await U.S. Inflation Data

LONDON (Reuters) — Gold prices climbed on Wednesday as the U.S. dollar and Treasury yields retreated, with investors awaiting key U.S. inflation data for insights into the Federal Reserve‘s interest rate strategy. Spot gold rose 0.4% to $2,687.59 per ounce by 1107 GMT, while U.S. gold futures surged more than 1% to $2,710.00.

The dollar index dipped 0.2%, making gold more affordable for holders of other currencies. Benchmark 10-year Treasury yields also slipped, adding to the metal’s appeal. The U.S. Consumer Price Index (CPI) data, due at 1330 GMT, is expected to show a 0.3% month-on-month inflation rate for December, with the annual figure rising to 2.9% from 2.7% in November.

“The market is on hold, waiting for the CPI data to see its impact on rate cuts,” said Ole Hansen, head of commodity strategy at Saxo Bank. “If CPI data is unexpectedly low, it could convince the market that we are still on a path to rate cuts.”

Investors are also closely watching the upcoming inauguration of Donald Trump, who is set to begin his second term next week. His pledge to impose tariffs on a wide range of imports has raised concerns about potential inflation spikes, which could limit the Fed’s ability to lower interest rates.

Gold, a traditional hedge against inflation, tends to benefit from economic uncertainty. However, higher interest rates typically reduce its attractiveness. Spot silver rose 0.6% to $30.07 per ounce, platinum gained 0.5% to $939.50, and palladium added 1.3% to $950.89.

Technical analysts noted that gold’s immediate resistance lies at $2,693.40, with a breakout potentially paving the way for a rally toward $2,726.30. A failure to hold the $2,663.51 pivot could signal a bearish turn, with the 50-day moving average at $2,644.52 as the next downside target.

Market participants remain cautious ahead of the CPI release, which could significantly influence the Fed’s rate outlook. A softer inflation reading could bolster the case for rate cuts later this year, supporting gold prices. Conversely, a stronger-than-expected CPI print may limit rate-cut expectations, potentially weighing on the metal.

As traders navigate these uncertainties, gold continues to serve as a safe-haven asset amid ongoing inflation concerns and geopolitical risks.