(Bloomberg) -- Gold erased an earlier gain after US data showed inflation eased in July, keeping the Federal Reserve on track to lower interest rates next month.
Bullion slipped as much as 0.9% on Wednesday, though it's still trading near the record high reached last month. While the core consumer price index — which excludes food energy costs — rose on an annual basis, it was still the slowest pace since early 2021, the US figures showed.
“Fed cuts were already priced into the markets - it's just a question now of by how much,” said Rhona O'Connell, an analyst at StoneX. “There is probably a touch of profit taking going on here, with short-term moves belying the longer-term fundamentals.”
Gold is up 19% this year, bolstered by mounting optimism on monetary easing and purchases by central banks. Lower interest rates are typically bullish for gold, which doesn't pay any interest. Bullion's appeal as a haven asset has also been boosted by tensions in the Middle East and Russia's war with Ukraine.
Spot gold declined to $2,443.29 an ounce by 4:52 p.m. in London. The Bloomberg Dollar Spot Index edged lower. Silver, platinum and palladium dropped.
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