Gold futures posted their first loss in three sessions on Wednesday, giving back almost all of the Tuesday gains that lifted prices to their highest settlement in nearly two weeks.

U.S. inflation data on Tuesday proved to be supportive for prices of precious metals, lifting gold futures to their highest finish since early September as the U.S. dollar slipped. The consumer-price index climbed another 0.3% in August, compared with a rise of 0.5% in July, the government said.

“Taper uncertainty is the single most important factor for gold, and unless and until, we don’t get any clarity on this, gold prices are likely to remain in a consolidation zone,” Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.

Looking at the economic data, it is very clear that the Federal Reserve “doesn’t have too much pressure to show aggressive stance” in their meeting next week. However, “traders still believe that tapering [of monthly bond purchases] is on the table for this year.”

So the “single most important event for the gold price now is the next week’s meeting and until then, gold prices are likely to continue their whipsaw movements,” said Aslam.

December gold 


fell $12.30, or 0.7%, to settle at $1,794.80 an ounce. On Tuesday, the yellow metal tacked on $12.70, or 0.7%, to $1,807.10, the highest finish for a most-active contract since Sept. 3, FactSet data showed.

Silver for December delivery

meanwhile, also gave back the bulk of Tuesday’s modest gain, down 8 cents, or about 0.4%, to $23.80 an ounce.

The 2021 rise in inflation is “a long way off 1970s’ levels, but it’s “going global as energy prices soar, and yet gold just isn’t responding,” said Adrian Ash, director of research at BullionVault.

It’s clear that for now, the precious metals market still agrees with central bankers that this spike in inflation is transitory, he told MarketWatch. However, if this energy scramble continues and a winter fuel crisis takes inflation higher again, gold at today’s $1,800 level “could look cheap in hindsight.”

Read: Why some benchmark aluminum prices have soared to a record

Meanwhile, the Fed’s meeting next week may not provide the clarity investors are looking for, some analysts said.

“Indeed, investors are waiting for more clarity from the Fed about the timing of the tapering. But, this will probably not arrive in the September meeting, increasing chances of keeping bonds in the current limbo, waiting for a clear directionality,” wrote Carlo Alberto De Casa, analyst at Kinesis Money, in a daily research note.

U.S. data released Wednesday showed that the cost of goods fell in August for the first time in 10 months, with the import price index down 0.3%.

Separately, the New York Fed’s Empire State business conditions index surged 16 points to 34.3 in September, according to the regional Fed bank, though economists had expected a reading of 17.2, according to a survey by The Wall Street Journal.

U.S. industrial production rose by a less-than-expected 0.4% last month and capacity utilization climbed to 76.4%, the highest rate since December 2019.

Against that backdrop, the U.S. dollar index was off 0.1% at 92.53, as gauged by the ICE U.S. Dollar Index
a measure of the world’s reserve currency against a half-dozen others. Meanwhile, benchmark 10-year Treasury note yields

are up at around 1.311% following a drop Tuesday.

A weaker dollar and lower yields can support buying in bullion which doesn’t offer a yield among investors from overseas. Week to date, gold was holding onto a modest gain, while the dollar and Treasury yields were lower.

Among the other Comex metals, December copper

tacked on 2% to $4.41 a pound.

October platinum

shed 0.9% to $930.50 an ounce, but December palladium

rose 0.8% to $1,991,60 an ounce after suffering a 5% loss Tuesday.

Read: Palladium prices drop to their lowest finish in more than a year

Also see: Why spot uranium prices have climbed to a 6-year high

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