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Gold prices pulled back from record highs in Asian trading on Wednesday, pressured by rising Treasury yields after Federal Reserve Chair Jerome Powell indicated no urgency in cutting interest rates.
Investors also leaned toward the U.S. dollar ahead of key consumer price index (CPI) inflation data, which could influence the Fed’s rate outlook.
Despite the recent decline, gold had reached a series of all-time highs earlier in the week amid heightened risk aversion. The surge was driven by increased U.S. trade tariffs under President Donald Trump, including a 25% duty on steel and aluminum and plans for reciprocal tariffs targeting major trading partners. Additionally, geopolitical tensions, particularly Trump’s stance on the Israel-Hamas conflict, fueled safe-haven demand. Spot gold hit a peak of $2,943.25 per ounce on Tuesday before retreating.
By 01:08 ET (06:08 GMT), spot gold slipped 0.4% to $2,887.02 per ounce, while April gold futures dropped 0.7% to $2,912.74 per ounce.
Gold Pressured by Treasury Yield Spike
Gold faced downward pressure as Treasury yields climbed, with the 10-year yield rising above 4.5% following Powell’s testimony before the Senate Banking Committee. Powell cited persistent inflation, U.S. economic resilience, and uncertainty over Trump’s trade policies as reasons for the Fed’s cautious stance on further rate cuts.
His remarks largely echoed the Fed’s stance from its January meeting, where policymakers left rates unchanged after implementing 100 basis points of cuts throughout 2024. The resulting surge in Treasury yields weighed on gold and other metals, as higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
Despite recent losses, gold remains on an upward trend, supported by ongoing global uncertainties.
Other precious metals also edged lower on Wednesday. Platinum futures remained flat at $1,037.45 per ounce, while silver futures declined 0.2% to $32.252 per ounce.
Industrial Metals Mixed Ahead of CPI Data
Among industrial metals, benchmark copper futures on the London Metal Exchange gained 0.1% to $9,370.10 per ton, while March copper futures dipped 0.1% to $4.5918 per pound.
CPI Data in Focus for Further Rate Cues
Investor attention now shifts to January’s CPI inflation report, set for release later on Wednesday. The data is expected to show inflation remaining steady from December, reflecting its recent stickiness.
Goldman Sachs anticipates core CPI—excluding volatile items—to come in slightly above consensus expectations, which could further influence the Fed’s policy decisions.
