Gold Steadies Above $1,700, But U.S. CPI Surprise Darkens Outlook

Gold prices held just around $1,700 on Wednesday, remaining under pressure as stronger-than-expected U.S. inflation data foreshadowed potential dollar gains.

Spot gold remained flat at $1,701.87 per ounce at 19:21 EDT, while December gold futures fell 0.3% to $1,712.25 per ounce (23:21 GMT).

Tuesday's decrease in the price of bullion was spurred by news that the U.S. consumer price index rose more than expected in August, bolstering expectations that the Federal Reserve will continue to tighten monetary policy this year. Spot gold briefly exceeded the primary support level for the year, $1,700, for the yellow metal.

If gold prices remain continuously below $1,700, analysts believe that losses will intensify dramatically.

After the announcement of CPI data, the dollar rose, gaining 1.7% on Tuesday and recovering its position near its 20-year highs, exerting more downward pressure on metal prices.

Ahead of the Fed meeting next week, where it is widely predicted that the central bank would raise interest rates by 75 basis points, investors refrained from making major gold trades. Due to sustained inflation, the November meeting of the bank is likely to result in a similar hike.

Wednesday, the dollar's gain weighed on the value of other precious metals. The price of silver decreased 0.9%, while platinum futures decreased 0.2%.

Gold and other precious metals have slumped significantly from their early-year peaks, as investors sought greater yields in the dollar and sovereign debt due to a rapid rise in interest rates.

Copper prices were flat on Wednesday, following a more than 2% decline in the prior session. Its falls were primarily due to the strength of the dollar.

A strike at the world's largest copper mine, Escondida, in Chile has prompted traders to predict a tighter supply of the red metal. As a result, the price of red metal has increased in recent sessions.

However, slowing global economic growth, particularly as interest rates continue to climb, is predicted to lower demand and mitigate supply shortages.