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Gold futures traded modestly lower on Wednesday, with the decline threatening to halt a four-session advance for bullion, as worries persist about inflation as the global economy recovers from the COVID-19 pandemic.
December gold
GCZ21,
GC00,
was trading $3.80, or 0.2%, at $1,827 an ounce, following a 0.2% gain on Tuesday, which marked a fourth straight session rise for most-active gold futures, the longest run since a five-day rise ended July 7, according to Dow Jones Market Data. Prices settled at their highest since Sept. 3.
Gold’s trading on the backfoot on Wednesday was partly attributed to renewed strength in the U.S. dollar on the session, coming ahead of a key reading of inflation.
“The precious metal dropped as the US dollar gained ground on other major currencies, due to the inverted correlation between the two assets,” wrote Ricardo Evangelista, senior analyst at ActivTrades, in a daily note.
“The greenback was in demand as investors await the release of American inflation numbers later today,” the analyst wrote.
The dollar was up 0.4% at 94.281, as gauged by the ICE U.S. Dollar Index
DXY,
a measure of the buck against a half-dozen currencies.
Investors will be watching for U.S. consumer inflation data after news of higher U.S. producer prices on Tuesday. Meanwhile, China on Tuesday reported its own factory gate prices surged 13.5% in October, the highest level since 1996. Consumer prices in the country rose 1.5% to a 13-month high, driven mainly by a jump in prices for food and fuel.
The U.S. consumer-price index reading for October will be released Wednesday, with market expectations calling for a 0.6% rise.
