Gold Retreats from Record Highs as Markets Eye U.S. Inflation Data
Gold prices pulled back from all-time highs in Asian trading on Wednesday, weighed down by rising Treasury yields after Federal Reserve Chair Jerome Powell signaled no rush to cut interest rates.
Investors remained cautious ahead of the release of U.S. consumer price index (CPI) inflation data, which is expected to shape expectations for future rate decisions.
Despite the retreat, gold had surged earlier in the week amid heightened market uncertainty following President Donald Trump’s announcement of 25% tariffs on steel and aluminum imports. Additional reciprocal tariffs on major U.S. trading partners further fueled demand for safe-haven assets.
Geopolitical tensions also contributed to gold’s rally, with Trump’s remarks on the Israel-Hamas conflict drawing strong reactions from Middle Eastern nations. Spot gold reached a record high of $2,943.25 per ounce on Tuesday.
By 06:08 GMT, spot gold had fallen 0.4% to $2,887.02 per ounce, while April gold futures slipped 0.7% to $2,912.74 per ounce.
Rising Treasury Yields Weigh on Gold
Gold faced downward pressure after Treasury yields climbed above 4.5% following Powell’s Senate testimony. The Fed chair emphasized concerns over persistent inflation, resilience in the U.S. economy, and the uncertain impact of Trump’s trade policies—factors that justify maintaining current interest rates.
Powell reiterated that monetary policy had already been sufficiently loosened following a 100-basis-point rate cut through 2024, dampening hopes for further reductions in the near term.
Higher Treasury yields increase the opportunity cost of holding non-yielding assets like gold, prompting some investors to shift their focus away from the precious metal.
Other Metals and Market Outlook
While gold pulled back, it remains on an upward trajectory, having posted strong gains over the past week.
Other precious metals also experienced declines. Platinum futures remained flat at $1,037.45 per ounce, while silver futures edged down 0.2% to $32.25 per ounce.
Industrial metals showed mixed movements, with benchmark copper futures on the London Metal Exchange rising 0.1% to $9,370.10 per ton, while March copper futures slipped 0.1% to $4.59 per pound.
CPI Data Key for Rate Expectations
Before Powell’s upcoming Congressional testimony, market focus remains on the January CPI inflation report, set to be released later Wednesday.
Inflation is expected to hold steady from December, though Goldman Sachs analysts project core CPI—excluding volatile items—to slightly exceed market expectations.
The report could provide further insights into the Federal Reserve’s policy direction, influencing gold prices and broader financial markets in the coming days.
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