WASHINGTON (dpa-AFX) - Gold futures for front month delivery settled notably lower on Wednesday, hurt by a strong dollar as hotter than expected U.S. consumer price inflation raised concerns the Federal Reserve will hold interest rates higher for a longer period.
Following the release of the data, the chances of a rate cut in June have plunged to just 15.1%, according to CME Group's FedWatch Tool.
The dollar index surged to 105.30 before easing a bit to 105.20, but was still more than 1% up from the previous close. Treasury yields surged in reaction to the inflation report, with the yield on the benchmark ten-year note jumping to its highest levels in almost five months.
Gold futures for April ended down $13.90 or about 0.6% at $2,329.60 an ounce.
Silver futures for April settled at $27.961 an ounce, gaining $0.070 or about 0.25%.
Data from the Labor Department showed U.S. consumer prices advanced by slightly more than expected in the month of March, climbing by 0.4%, matching the increase seen in February. Economists had expected consumer prices to rise by 0.3%.
The report also said the annual rate of consumer price growth accelerated to 3.5% in March from 3.2% in February. Economists had expected a more modest acceleration to 3.4%.
Meanwhile, the annual rate of core consumer price growth came in at 3.8% in March, unchanged from February. Core price growth was expected to slow to 3.7%.
The data has added to recent worries the Federal Reserve will hold off on lowering interest rates amid ongoing inflation concerns.
Fed officials have repeatedly said they need greater confidence inflation is slowing before they consider cutting rates.
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