Gold prices retreated from their record highs on Wednesday as the U.S. dollar strengthened and Treasury yields rose. This movement came in response to a robust inflation report, which tempered speculation about an imminent rate cut in the United States.

As of 8:58 a.m. ET, spot gold declined by 0.6% to $2,338.19 per ounce, while U.S. gold futures dipped 0.1% to $2,360.7.

The U.S. dollar index surged by 0.5%, and U.S. Treasury yields experienced an uptick after the release of the data, diminishing the appeal of non-yielding bullion.

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Even though bullion is often touted as a hedge against inflation, its attractiveness tends to diminish in periods of elevated interest rates. On Tuesday, bullion prices reached an all-time high of $2,365.09.

“Since mid-March, both gold and silver prices have been steadily climbing, reaching all-time highs in both international and domestic markets. This surge in demand can be attributed to expectations of rate cuts by central banks worldwide and escalating geopolitical tensions, factors that have significantly impacted bullion prices. Currently, both gold and silver are navigating through overbought territories, facing strong resistance levels. International gold prices are encountering robust resistance between $2450 and $2485, while domestically, the bullish momentum is expected to taper off around levels of 72000 to 72200. Similarly, silver prices are facing resistance internationally at levels between $28.50 and $28.95, and domestically at around 83500. Given these conditions, profit-taking in both precious metals is anticipated to be on the horizon,” said Riya Singh – Research Analyst, Commodities and Currency Desk, Emkay Global.

In a recent statement, HSBC projected a broad trading spectrum for gold prices in 2024, ranging between $1,975 and $2,500. “Escalating geopolitical risks significantly bolster gold as hot and cold conflicts, and a record number of elections this year, keep the risk thermometer high,” HSBC was quoted as saying .

The Shanghai Futures Exchange announced on Wednesday its decision to implement trading limits on gold contracts, prompted by a significant surge in prices.

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Kieran Tompkins, a commodities economist at Capital Economics, as quoted , attributed the robust purchasing activity among Chinese households to limited investment alternatives amidst a property sector crisis and stagnant stock market conditions.

Silver prices dipped by 0.5% to $28.01 per ounce following a recent near three-year high on Tuesday. Meanwhile, platinum decreased by 1% to $969.05, and palladium saw a 1.9% decline to $1,071.75.

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