On Wednesday, the gold price remained below $2,000 per ounce. This level is the lowest in the past two months. The reason for this is a report showing stronger-than-expected US consumer inflation. This report made many people believe that the Federal Reserve will not reduce interest rates anytime soon.
Additionally, the gold price faced downward pressure because the value of the US dollar and Treasury yields both increased significantly.
In January, the overall inflation rate in the US decreased to 3.1% from December’s 3.4%. Still, this was higher than what many had predicted, which was 2.9%.
The inflation rate that excludes food and energy costs did not change and remained at 3.9%. This was unexpected. Many had thought it would drop to 3.7%.
After seeing these inflation numbers, traders now think that the Federal Reserve is unlikely to cut interest rates in March. They also believe that a rate cut in May is less probable.
Now, traders are looking forward to seeing the US retail sales figures. They are also eager to hear from Federal Reserve officials this week. They hope this information will help them understand what to expect from future financial policies.