Gold saw a slight improvement in trading on Wednesday, after managing to recoup some of its early losses.
This improvement followed the release of U.S. data showing an unexpected decline in producer prices, which eased expectations of monetary policy tightening.
The spot price of gold settled at $4,057.34 per ounce.
It had fallen by about 1% earlier in the session.
U.S. August gold futures also fell 0.4% to $4,051.80 per ounce.
Philip Streible, chief market analyst at Blue Line Futures, explained that gold pared its losses following the release of producer price index data.
The data came in below market expectations.
He added that these results eased concerns that the Federal Reserve would raise interest rates several times this year.
Data from the U.S. Department of Labor showed that the Producer Price Index for final demand fell by 0.3% in June.
Meanwhile, expectations had been for it to remain unchanged.
Consumer price inflation data, released yesterday, also came in lower than expected, reinforcing investors’ bets on a slowdown in the pace of monetary policy tightening.
In addition, market expectations for an interest rate hike at the Fed’s July meeting fell to about 10.2%, down from 16.6% before the economic data was released.
Conversely, tensions in the Middle East continue to cast a shadow over the markets.
The United States announced the launch of a new wave of strikes against Iran, while Tehran threatened to restrict regional energy exports.
This has contributed to the continued rise in oil prices, which could increase inflationary pressures and influence central bank policy.
As for other precious metals, silver fell by 1.8%, platinum rose by 0.9%, and palladium fell by 0.9%.
