Gold Prices Under Pressure Ahead of US Inflation Data Release

December 12, 2023

Gold remained below the $1,990 per ounce mark on Tuesday, extending its decline over the past two sessions. Investor sentiment stayed cautious as they awaited a crucial US inflation report and anticipated interest rate decisions from major central banks scheduled for later in the week.

The upcoming release of US consumer inflation data on Tuesday, followed by US producer inflation figures on Wednesday, added to the apprehension among market participants. This uncertainty was further fueled by impending monetary policy decisions from prominent central banks such as the Federal Reserve, the European Central Bank, and the Bank of England.

Analysts predict that these central banks might challenge prevailing expectations for early-year rate cuts, contributing to the overall caution in the markets.

In economic news, the latest data from November revealed a robust addition of nearly 200 thousand jobs to the US economy. This figure surpassed market expectations of a 180 thousand net gain, and the unexpected decline in the unemployment rate added an extra layer of complexity to the economic landscape.

Meanwhile, reports from Bloomberg indicated that officials from the Bank of Japan are not feeling compelled to swiftly implement policy tightening. Their stance is contingent on substantial evidence of wage growth that can effectively support sustainable inflation.

As the week progresses, the gold market is likely to remain on edge, influenced by the unfolding economic indicators and the decisions of major central banks, which will play a pivotal role in shaping market sentiment in the days to come.

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