Gold price correction deepens ahead of key US inflation report

WEB DESK: Gold prices continued to fall on Wednesday as easing tensions between the United States and China dampened investor demand for the safe-haven metal.

Traders also locked in profits following bullion’s sharp rally to record highs earlier this week, while awaiting key US inflation data due later this week.

Profit-taking and trade hopes weigh on gold

Spot gold dropped 0.4 percent to $4,109.19 per ounce by 0236 GMT, after plunging more than 5 percent on Tuesday in its steepest single-day fall since August 2020. Meanwhile, US gold futures for December delivery rose 0.4 percent to $4,124.10 per ounce.

Analysts said the drop was largely a technical correction following gold’s meteoric rise past the $4,000 mark. “The simmering of trade tensions between the US and China was the snowflake which caused the avalanche and reversal of gold’s momentum trade,” said Matt Simpson, senior analyst at StoneX. “This is simply a technical repositioning in a market that clearly needed a pullback. I suspect we’ve seen the worst of the volatility, as dips will still likely be bought.”

Geopolitical developments ease market nerves

US President Donald Trump said he expected to reach a fair trade agreement with Chinese President Xi Jinping during their meeting next week in South Korea. He also played down the likelihood of conflict over Taiwan, further calming markets that had been jittery over escalating tensions.

Adding to the optimism, reports from India’s Mint newspaper said Washington and New Delhi were close to finalising a trade deal that would lower US tariffs on Indian imports to between 15 and 16 percent from the current 50 percent.

Focus shifts to US inflation and Fed policy

Gold prices have surged about 56 percent so far this year, reaching an all-time high of $4,381.21 on Monday. The metal’s rally has been fuelled by global economic uncertainty, expectations of US rate cuts and continued central bank purchases.

Investors now await the release of the delayed US consumer price index (CPI) report for September, due on Friday, to gauge the Federal Reserve’s next move. According to a Reuters poll, economists expect the Fed to cut its key interest rate by 25 basis points next week and again in December, though there remains wide disagreement over the outlook for 2026.

Other precious metals

In the broader market, spot silver edged up 0.1 percent to $48.82 per ounce, platinum slipped 1.5 percent to $1,528.15, while palladium gained 0.7 percent to $1,418.09.

Gold price in Pakistan

In the domestic market, gold prices held steady on Tuesday. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold stood at Rs444,900 per tola, unchanged from the previous session.

Likewise, the rate for 24-karat gold per 10 grams remained stable at Rs381,430. Meanwhile, 22-karat gold was quoted at Rs349,656 per 10 grams.