Gold futures faced a second consecutive decline on Wednesday, marking a fresh three-week low. The most-active contract prices recorded their lowest level since August 22, 2023, based on data from Dow Jones Market Data.
The decline in gold prices occurred as the latest data on the U.S. consumer price index failed to provide clarity regarding the Federal Reserve’s policy outlook. The December gold futures contract (GCZ23) decreased by $2.60, equivalent to 0.1%, closing at $1,932.50 per ounce on Comex.
Han Tan, Chief Market Analyst at Exinity, noted that the increase in the core consumer price index (CPI) may revive expectations of another interest rate hike by the Federal Reserve. Tan suggested that such expectations could limit the potential upside for gold in the short term, explaining, “As long as hopes for Fed rate cuts are kept at bay, bullion bulls should struggle to carve out meaningful gains for the precious metal.”
The Federal Reserve’s monetary policy has a significant impact on gold prices, as higher interest rates typically reduce the appeal of non-yielding assets like gold. Consequently, the uncertainty surrounding the direction of the Federal Reserve’s policy seems to be placing pressure on gold futures.
