The price of gold rose on Wednesday, with global tensions providing support and gold showing signs of being a safe haven again.
Gold price had fallen yesterday after US CPI rose to 3.8%, putting pressure on the Fed to cut interest rates, a move that usually reduces the appeal of gold.
But gold prices bounced back, suggesting traders were once again looking at gold as a place to shelter from the mounting uncertainty facing the global economy.
“Higher-than-expected U.S. CPI data put pressure on gold yesterday, pushing the metal down toward nearly USD 4,640/oz,” said Linh Tran, Market Analyst at XS.com.
“However, the subsequent rebound back above USD 4,700/oz suggests that the market is beginning to reassess gold’s role as a safe-haven asset and a store of value amid persistent inflation and rising macroeconomic uncertainty.
“April U.S. CPI data showed that price pressures remain a concern. CPI rose 0.6% month-on-month and 3.8% year-on-year, marking the highest annual inflation rate since May 2023. Core CPI also increased by 0.4%, while U.S. Treasury yields and the U.S. dollar both recovered after the data release. Higher-than-expected inflation reduced expectations that the Fed could cut interest rates soon, thereby increasing the opportunity cost of holding gold.”