Gold hold ground despite sticky US inflation data

LONDON (May 11) Gold prices remain steady as US inflation eases slightly but remains elevated, pointing to a potentially hawkish outlook from the Federal Reserve.

Gold prices held steady on Thursday, as investors digested the latest Consumer Price Index (CPI) figures from the United States. The data showed that inflation had eased slightly in April but remained higher than the Federal Reserve's annual target range.

Despite the CPI figures being slightly lower than expected, the prospect of an economic slowdown in the US helped keep gold prices above $2,000.

The steady safe haven demand for gold came as markets bet that US interest rates would remain high for the foreseeable future. However, the inflation data also suggested that price pressures were still elevated in the country, which could lead to a potentially hawkish outlook from the Federal Reserve.

Interestingly, traders have been reducing their expectations for any rate cuts this year, as the sticky inflation data suggests that the Fed is unlikely to make any further interest rate cuts. In fact, markets are now pricing in an almost 100% chance that the Fed will pause in June.

As a result, spot gold XAUUSD is currently trading at $2,022.11 an ounce by 09:36 am. Although the prospect of US rates remaining high may not be ideal for non-yielding assets like gold, the yellow metal still has the potential to benefit from increased safe haven demand in the face of worsening economic conditions this year.

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