© Reuters.
By Ambar Warrick
Investing.com– Gold prices hovered near a six-month high on Wednesday following a sharp rally in the prior session, as markets waited for the Federal Reserve to hike interest rates later in the day and also weigh in on easing inflationary pressures.
Bullion prices rallied sharply on Tuesday after data showed U.S. (CPI) inflation eased further in November, further indicating that price pressures in the country have peaked and are likely to retreat.
was flat around $1,809.90 an ounce, while held around $1,821.70 an ounce by 19:21 ET (00:21 GMT). Both instruments rallied about 1.6% on Tuesday.
Data showed U.S. CPI inflation eased more than expected to 7.1% in November, coming as a result of tighter monetary conditions, easing fuel prices and softening economic growth in the country. It also was the softest inflation reading seen in a year.
Focus now turns to the conclusion of the , due later in the day. The central bank is expected to hike interest rates by 50 basis points (bps).
But markets will be closely watching after the meeting, to see whether the central bank thinks inflation has cooled sufficiently to begin further tapering its pace of interest rate hikes.
A rally in risk-driven markets was also cut short on Tuesday by anticipation of the Fed, given that the central bank has maintained a largely hawkish stance against inflation this year.
A series of sharp interest rate hikes by the Fed battered metal markets this year, as the bank made combating price pressures its main priority. Any signals of smaller rate hikes is likely to benefit markets in the near-term.
Other precious metals also logged strong gains on Tuesday. rose 3.3%, while added 2.2%.
Among industrial metals, copper prices fell on Wednesday amid continued uncertainty over demand in major importer China. were down 0.2% to $3.8407 a pound.
While the red metal also rallied on Tuesday tracking a weaker dollar, fears of sluggish near-term demand kept gains in check.
China is grappling with its worst COVID outbreak yet and is expected to see a surge in cases as it relaxes several virus-linked restrictions.
But on the supply side, production of the red metal may tighten in the near-term, especially due to public unrest in world no.2 copper producer Peru.
