Gold prices fall as investors eye US inflation data, Trump's tariff plans

Gold prices eased on Wednesday after a recent record rally, while investors looked towards inflation data due later this week and the latest developments on US President Donald Trump's tariff plans.

Spot gold fell 0.7 per cent to $2,894.55 an ounce as of 09:44 a.m. ET (1444 GMT). Bullion, a preferred hedge against uncertainty and inflation, hit a record high of $2,956.15 on Monday amid trade war concerns emerging from tariff threats. 

US gold futures fell 0.4 per cent to $2,908.10.

On Tuesday, Trump ordered a probe into potential newtariffs on copper imports to rebuild US production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods.

 

"Bullish trend is still in place... We are not surprised by a period of consolidation ahead of some piece of important data," said David Meger, director of metals trading at High Ridge Futures.

Investors' focus was also on the US Personal Consumption Expenditures (PCE) report, the Federal Reserve's preferred inflation gauge, due on Friday.

Higher than expected inflationary could delay further rate cuts, which is priced in; gold is one of the quintessential hedges against those inflationary pressures, so it should gain more, Meger added.

The US central bank reduced the interest rate three times in the previous year, amounting to a total cut of 75 basis points.

Money markets are currently pricing 54 bps of Fed rate cuts IRPR by the year-end, which implies two 25 bps easing moves and an around 20 per cent chance of an additional cut.

"Central bank behaviour will be key to gold's fortunes, as they have been an important element for demand in recent years," Frank Watson, market analyst at Kinesis Money, said in a note.

Spot silver was down 0.5 per cent to $31.57, platinum eased 0.4 per cent to $963 and palladium dropped 0.4 per cent to $924.01.