Gold Inches Higher As U.S. Dollar Dips Following Inflation Data

(RTTNews) - As the much-awaited U.S. CPI data came in below estimates, expectations for the Federal Reserve to cut interest rate in the coming months increased. As a result, the U.S. dollar went down and the price of gold edged slightly higher on Wednesday.

Front month gold for June delivery inched up 40 cents or less than a tenth of a percent to settle at $3321.30 per troy ounce today.

Meanwhile, front month Silver for June delivery fell 37.6 cents or 1.0 percent to settle at $36.166 per troy ounce today.

Today, the US Court of Appeals for the Federal Circuit in Washington, D.C., allowed Trump's tariffs to remain in effect - for now - as it reviews a lower court decision to block them. In essence, for the time being, the global economy should feel the aftereffects of tariffs. This supported gold.

On the U.S.-China trade front, after two days of talks between U.S. and Chinese senior-level officials in London, Trump has stated that a new deal has been done. He said that China will supply magnets and rare earth minerals (Lithium for electric vehicles and Beryllium for defense, aerospace, and telecom) to the U.S., while the U.S. will allow Chinese students to pursue their courses in American colleges.

Though this arrangement awaits sign-off from both nation's leaders to become official, currently it is seen as a positive signal for the economy.

On the economic front, data released by Labor Department showed that the Consumer Price Index (CPI) crept up by 0.1 percent in May, below forecasts of a 0.2 percent increase. Annual inflation rose to 2.4 percent in May though below forecasts of 2.5 percent. These numbers have raised that the Fed would go for interest rate cuts by September.

Analysts are now looking forward to the Produce Price Index report to be released tomorrow as that is factored in by the Fed in making monetary policy decisions ahead of their June 17-18 meeting.