Gold Prices Hold Near Flat as Markets Assess Iran Conflict and U.S. Inflation Data
Spot gold prices traded slightly lower during European trading on Wednesday, as investors analyzed mixed signals surrounding the U.S.-Israel conflict with Iran and its potential impact on global energy markets.
At the same time, newly released data from the U.S. Labor Department showed that consumer price inflation remained relatively moderate in February. However, the outlook for inflation has become more uncertain following recent volatility in oil markets triggered by the Iran conflict.
Gold Prices Show Volatility
By 10:26 ET (14:26 GMT), spot gold declined 0.1% to $5,187.41 per ounce, while gold futures dropped 0.9% to $5,196.19 per ounce.
The precious metal has experienced significant price swings in recent weeks, retreating from a record high near $5,600 per ounce reached in late January.
Uncertainty surrounding the Iran conflict has also contributed to volatile trading conditions. Earlier this week, U.S. President Donald Trump suggested the war could be nearing its end. However, ongoing military strikes between the United States, Israel, and Iran indicated that tensions remain elevated, marking the twelfth consecutive day of fighting.
Energy Prices and Inflation Concerns
Financial markets are increasingly concerned that rising energy prices could push inflation higher worldwide. If inflation accelerates, central banks may adopt a more hawkish monetary policy stance, potentially strengthening the U.S. dollar.
A stronger dollar typically makes gold more expensive for international buyers, which can reduce demand for the precious metal.
U.S. CPI Data Meets Expectations
Recent U.S. inflation data largely matched economists’ expectations. The Consumer Price Index (CPI) increased 2.4% year-over-year in February, unchanged from the previous month.
On a monthly basis, consumer prices rose 0.3%, slightly higher than the 0.2% increase recorded in January. The rise was driven mainly by higher food and energy prices, according to the Labor Department.
Core Inflation Remains Stable
When excluding volatile components such as food and fuel, the core CPI rose 2.5% year-over-year, matching both January’s reading and market forecasts.
Some categories experienced price increases, including airfares and household items such as window and floor coverings, while prices declined in areas like toys and footwear, which are often sensitive to tariffs.
The core CPI increased 0.2% month-over-month, slightly slower than the 0.3% gain recorded in January, but still in line with analyst expectations.
Iran Conflict Could Impact Future Inflation
Importantly, the February inflation figures do not fully reflect the impact of the Iran conflict, which began after U.S. and Israeli strikes on Tehran in late February. As a result, future inflation readings could show stronger effects from energy price volatility.
Key Inflation Data Still Ahead
Investors are also preparing for the release of the core Personal Consumption Expenditures (PCE) price index, another key inflation indicator closely watched by the Federal Reserve.
Economists currently expect core PCE inflation to reach 3.1% year-over-year and 0.4% month-over-month. Because the Federal Reserve considers this index its preferred measure of inflation, the upcoming report could have a significant impact on expectations for future U.S. interest rate policy.
