Gold prices eased on Wednesday, drifting toward the $4,700 per ounce level, as stronger-than-expected US inflation data dampened expectations of early Federal Reserve interest rate cuts.
Spot gold was last at $4,699.73 per ounce, down 0.33 percent on the day, extending recent weakness after a volatile period in global markets.
The move followed data showing US consumer inflation rose to 3.8 percent in April, above market expectations of 3.7 percent and the highest level since May 2023. The increase was driven in part by rising energy costs linked to ongoing tensions in the Middle East, which have pushed up global oil prices and added to broader price pressures.
Higher inflation typically reduces the appeal of gold, as it encourages central banks, particularly the Federal Reserve, to keep interest rates higher for longer, increasing the opportunity cost of holding non-yielding assets such as bullion.
Despite the recent pullback, gold remains significantly higher on a year-on-year basis, up nearly 47.5 percent, reflecting sustained demand amid geopolitical uncertainty and macroeconomic instability. However, the metal is down about 2.9 percent over the past month as investors reassess rate expectations.
In parallel developments, India has raised import tariffs on gold and silver in an effort to reduce bullion inflows and support the rupee. The move is expected to weigh on physical demand from one of the world’s largest gold-consuming markets.
Elsewhere in commodities, oil prices have remained firm over recent sessions as diplomatic efforts to resolve the US–Iran conflict continue to stall. The ongoing tensions have kept energy markets volatile and added to inflation concerns globally.
