Gold falters as inflation moderates

12.08.2021 - Evdokimov Roman
Gold falters as inflation moderates

Gold tumbled following its largest gain in three months, as softening US inflation darkened the outlook for when the US Federal Reserve may start easing stimulus.

Data released on Wednesday showed US consumer prices went up at a slower pace last month than in June. This prompted a move higher for gold as worries over the Central Bank’s urgency to rescind monetary stimulus softened. However, prices are still lower this week, following Monday’s flash crash.

Meanwhile, Kansas City Fed President Esther George announced that it is time to dial back tight monetary policy as the labor markets recover. This statement adds to the increasing number of commentaries from officials that hint towards the Fed readying to ease its massive bond-buying program.

The global economic recovery from the effect of the pandemic has put pressure on bullion this year as investors brace for the withdrawal of the ultra-easy policies of the pandemic era. Gold is also tracking the dollar inversely, with August losses for the yellow metal reflected in the dollar’s gains.

In related news, spot gold fell 0.1% at $1,749.99 an ounce by 11:29 AM Shanghai time, following its 1.3% gain on Wednesday. Likewise, silver, platinum, and palladium also suffered declines.

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