Gold prices fell on Wednesday as concerns persist about higher inflation and a possible policy tightening by the U.S. Federal Reserve.
The downside, however, remained capped by lingering worries about a resurgence of coronavirus infections in some parts of Asia.
Spot gold dipped 0.6 percent to $1,859.07 per ounce, while U.S. gold futures were down half a percent at $1,858.95.
A risk-off mood drove some haven flows towards the U.S. dollar and U.S. Treasury yields edged higher as investors grew more nervous about the growing threat of higher inflation.
Data released earlier in the day showed that U.K. inflation more than doubled to 1.5 percent in April.
Eurozone inflation also accelerated, as initially estimated to a two-year high in April, driven by higher energy prices, final data from Eurostat revealed.
Inflation rose to 1.6 percent in April from 1.3 percent in March. The annual rate came in line with the flash estimate published on April 30. This was the highest rate since April 2019, when inflation was 1.7 percent.
Iceland’s central bank raised its key interest rate by a quarter-basis point today, citing higher inflationary pressures.
“It is necessary to raise the interest rates in order to ensure that inflation expectations are anchored to the target,” the bank said after raising the rate on seven-day term deposits by 25 basis points.
Investors wait for more clues on policymakers’ views on inflation when the U.S. Federal Reserve releases minutes of its most recent policy meeting later in the day.
The material has been provided by InstaForex Company – www.instaforex.com