Gold (XAU/USD) steadied in early European trade on Wednesday, clawing back some overnight losses after stronger-than-expected US inflation figures drove a brief rally in the dollar.
Spot gold was trading at $3,340.11 an ounce by 09:45 GMT, holding within familiar territory as conflicting market signals kept bullion tethered to its recent range.
Tuesday’s US consumer price index (CPI) reading showed inflation running hotter than forecast for June, raising doubts over imminent interest rate cuts from the Federal Reserve. The dollar briefly strengthened following the data, dampening gold’s upside momentum.
But safe haven demand for gold remained supported by lingering concerns over President Donald Trump’s tariff offensive. With fresh levies aimed at major trading partners, and growing uncertainty over trade talks, investors remained wary of escalating economic disruption.
Political risks added to the mix. Trump and his allies have amplified calls for Federal Reserve Chair Jerome Powell’s removal, stoking unease over the central bank’s independence. Meanwhile, the Russia-Ukraine conflict showed no signs of easing, after the White House authorised more weapons deliveries to Kyiv.
Despite pockets of strength this week, gold has struggled to break free from its established range. After hitting record highs in April, bullion has largely lagged behind other precious metals, weighed down by speculation of overstretched valuations and persistent dollar strength.
For now, the path higher for gold remains clouded by the tug-of-war between sticky inflation and geopolitical risk.
