XAU/USD falls for a second day as US inflation data fuels Fed rate hike expectations and geopolitical risks lift the dollar.
Gold prices extended losses below $4,638 on Wednesday, failing to sustain an overnight rebound as the US dollar strengthened. The move followed stronger-than-expected US inflation data, reinforcing bets for a more hawkish Federal Reserve and pressuring the non-yielding metal.
The US Consumer Price Index rose 3.8% year-over-year in April, a near three-year high, while core CPI climbed to 2.8%, well above the Fed’s 2% target. Traders now see a 35% chance of a Fed rate hike by year-end, alongside concerns over persistent inflation amid elevated crude oil prices linked to US-Iran tensions.
US Treasury yields surged, with the 30-year bond briefly touching 5.0%, nearing its yearly peak, further weighing on gold. The dollar’s rise to a one-week high added to the pressure on the precious metal.