Gold eased on Wednesday after stronger US inflation data further reduced expectations for Federal Reserve rate cuts, outweighing support from persistent tensions in the Middle East and leaving bullion under pressure as traders reassessed the path for interest rates.
Spot gold fell 0.4% to $4,695.99 an ounce by 0231 GMT, while US June gold futures rose 0.4% to $4,705.30.
The split between spot and futures suggested investors were still weighing competing short-term forces, with firmer inflation undermining the case for easier monetary policy even as geopolitical risks continued to support demand for safe-haven assets.
Prices and policy expectations
Gold’s retreat followed April consumer price data from the US that showed inflation accelerated again, with the annual reading posting its biggest rise in three years.
The figures dealt a fresh blow to hopes that the Fed would be able to lower borrowing costs this year.
Markets have now largely ruled out rate cuts in 2026 and are instead beginning to price in the risk of further tightening.
Traders currently see a 30% chance of a Fed rate increase by December, according to CME Group’s FedWatch tool.
That shift in expectations is important for gold because higher interest rates typically weigh on non-yielding assets by increasing the appeal of cash and fixed-income investments.
The latest inflation reading has therefore changed the tone of the market.
Rather than asking when the Fed might begin to ease, investors are now considering whether the next move could once again be higher.
That has placed bullion on the defensive, particularly after its strong run in recent months.
Geopolitics still offers support
Even so, losses in gold were limited by continued uncertainty in the Middle East.
President Donald Trump said he did not believe he would need China’s help to end the war with Iran, while signs of progress towards a lasting settlement remained scarce.
Attention has also turned to the Strait of Hormuz, where Tehran’s stance has kept energy markets on edge.
US Treasury Secretary Scott Bessent said Trump and Chinese President Xi Jinping would discuss the Iran war, while calling on Beijing to join an international effort to reopen the waterway to shipping.
That backdrop has helped prevent a steeper fall in bullion.
Gold tends to draw support during periods of geopolitical stress, especially when conflict threatens oil supply routes and raises the risk of broader financial-market volatility.
In the current environment, however, that haven bid is being offset by a more hawkish interest-rate outlook in the US.
India raises import duties
Another factor in focus was India’s decision to raise import tariffs on gold and silver to 15% from 6%.
The government moved to curb imports and preserve foreign exchange reserves at a time of mounting pressure on the currency.
The change could have implications for physical demand in one of the world’s largest precious-metals markets.
Higher duties tend to raise domestic prices and may temporarily damp consumption, particularly if buyers delay purchases in the hope of more stable policy or lower prices.
For gold, the move adds another layer of uncertainty. International prices are already navigating tighter monetary conditions, and any sign of softer demand from India could make it harder for bullion to recover quickly.
Other precious metals
Elsewhere, spot silver rose 0.2% to $86.71 an ounce after touching its highest level since March 11 earlier in the session.
Platinum fell 0.8% to $2,109.53 an ounce, while palladium also moved lower.
For now, gold remains caught between two powerful forces.
Sticky US inflation is pushing rate-cut hopes further into the background, but geopolitical risk and uncertainty over global trade and shipping routes are still providing some underlying support.
That leaves markets focused on upcoming policy signals and any fresh developments in the Middle East, both of which are likely to shape bullion’s next move.