Gold Falls Below $4,700 on Hot US CPI Data

Gold prices edged lower for a second straight day on Wednesday, trading just below $4,700 per ounce after hotter-than-expected U.S. inflation data diminished prospects for Federal Reserve interest rate cuts.

Spot gold fell about 0.4 percent to around $4,699 during London morning trading, while futures were slightly higher at $4,706. The decline followed Tuesday's release of April Consumer Price Index figures, which showed prices rising 3.8 percent year-over-year, up from 3.3 percent in March and the fastest pace since 2023. Gasoline prices, boosted by disruptions from the ongoing Iran conflict, contributed significantly to the surge. Core CPI, excluding food and energy, also accelerated.

The data prompted traders to boost the odds of a Fed rate hike by year-end to about one in three, up sharply from near zero a month earlier, according to interest-rate swaps markets. U.S. Treasury yields climbed in response, with the 10-year note yield rising as investors demanded higher returns amid sticky inflation. The dollar index firmed near a one-week high, adding pressure on the non-yielding metal, which becomes less attractive when rates and the currency strengthen.