Gold stalls below $5,200 as markets brace for US inflation data
LONDON (March 11) Gold (XAU/USD) trades with a mild downside bias on Wednesday, failing to build on the previous day’s gains as the US Dollar (USD) rebounds and Treasury yields edge higher ahead of the US inflation data at 12:30 GMT.
At the time of writing, XAU/USD is trading around $5,189, hovering near the upper end of a week-long trading range as buyers struggle to sustain gains above the $5,200 mark.
Investors await US inflation report for fresh monetary policy signals
Economists expect the Consumer Price Index (CPI) to rise 0.3% MoM in February, accelerating from 0.2% in January, while the annual CPI inflation rate is forecast to remain steady at 2.4%.
Core CPI, which excludes volatile food and energy prices, is expected to grow by 0.2% MoM, less than the 0.3% advance seen a month earlier, while the annual core reading is expected to grow at a steady 2.5%.
The data is unlikely to influence the Federal Reserve’s (Fed) interest-rate decision next week, with markets widely expecting rates to remain unchanged. Instead, the report will likely help shape expectations for the Fed’s monetary policy path in the coming months.
US-Iran war puts Strait of Hormuz and global Oil supply in focus
Geopolitical tensions surrounding the ongoing US-Iran conflict remain front and center, with no clear signs of easing as the war enters its 12th day, keeping markets on edge.
The United States (US) and Israel continue to bombard Iranian military targets, while Tehran retaliates with missile and drone attacks against US and Israeli assets across the region.
As the conflict expands, the Strait of Hormuz has become a key focal point. Shipping through the strategic waterway has slowed significantly as security risks increase. The US military said it destroyed 16 Iranian vessels believed to be preparing to lay naval mines near the strait.
Against this backdrop, energy markets remain volatile as traders continue to assess the evolving geopolitical situation and its potential impact on global Oil supply. On Tuesday night, The Wall Street Journal reported that the International Energy Agency (IEA) has proposed the largest release of strategic oil reserves in history, potentially around 400 million barrels, in an effort to combat rising crude prices.
Despite heightened geopolitical uncertainty, Gold has struggled to attract strong safe-haven demand as investors appear to favor the US Dollar for liquidity in times of market stress.
At the same time, fears that a prolonged conflict could keep Oil prices elevated are fueling concerns about global inflation, potentially complicating the Fed’s easing path. This scenario also favors the US Dollar and caps gains in the non-yielding metal.
FXStreet
