14th Feb 2024: Gold experienced a significant decline today following the release of the highly anticipated US inflation data, which came in hotter than expected. Both the headline and core Consumer Price Index (CPI) figures exceeded forecasts as inflation remained stubbornly higher than hoped. Treasury yields climbed higher in reaction, with 2-year yields surpassing 4.6% adding to the pressure on gold prices.

Hopes for an interest rate cut in May declined significantly after the inflation data release and have now shifted toward June. High interest rates for longer could weigh on gold’s prospects over the coming weeks. Traders could now turn to other data releases later this week for more clues on the state of the US economy and potential changes in monetary policy expectations.

A stronger dollar could also weigh on gold. The currency has been improving since the beginning of the year and could continue to do so if interest rates remain high. However, gold could find some support over the medium term as markets continue to see rate cuts happening later this year. Additionally, geopolitical developments and potential economic issues in other regions could attract investors toward the asset.