Gold futures fell for a second consecutive session on Wednesday, settling at a fresh three-week low. The most-active contract prices reached their lowest since August 22, 2023, according to Dow Jones Market Data.
The downturn in gold prices comes as the latest U.S. consumer price index data failed to provide clarity on the Federal Reserve's policy outlook. December gold GCZ23 declined by $2.60, or 0.1%, to settle at $1,932.50 an ounce on Comex.
Han Tan, chief market analyst at Exinity, stated that the uptick in core CPI may keep alive the prospects of one more Fed rate hike. He noted that such expectations could limit gold's potential upside in the short term. "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," Tan explained.
The Federal Reserve's monetary policy has a significant influence on gold prices as higher interest rates typically decrease the attractiveness of non-yielding assets like gold. As a result, the uncertainty around the Federal Reserve's policy direction appears to be exerting pressure on gold futures.
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