Gold prices extended losses on Wednesday as stronger-than-expected US inflation data and a weakening technical outlook reinforced expectations that the Federal Reserve will keep interest rates elevated, weighing on demand for the non-yielding metal.
Spot gold slipped to around US$4,701.98 per ounce, retreating further from recent highs as markets continued to reassess the outlook for monetary policy following data showing US consumer inflation rose at its fastest pace in three years in April.
Sentiment was further pressured by shifting rate expectations, with traders largely pricing out any Fed rate cuts this year and some market indicators pointing to a growing probability of a rate hike by December.
Adding to the downside momentum, technical indicators from RHB Investment Bank suggested gold has broken below its 20-day simple moving average, signalling that bearish control is strengthening while the relative strength index has also slipped below the 50 level.
RHB said the breakdown confirms a resumption of downside pressure, with the next support seen at US$4,500, followed by US$4,400, while resistance is capped near US$4,850 and US$5,000, keeping a negative trading bias in place as the correction phase continues.
The move comes as global markets also monitor geopolitical developments including US-China talks and ongoing Middle East tensions, although these factors have so far failed to offset the impact of higher-for-longer interest rate expectations on bullion prices.
